Technology and Employment Innovation and Growth in the U.S. Economy (1987) / Chapter Skim
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7: Current Policies for Worker Adjustment
7: Current Policies for Worker Adjustment
Pages 137-159
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From page 137... ...
The primary emphasis of this chapter is on public policies; Chapter 6 discusses private sector policies that encourage cooperation between managers and labor. Because of the complexity of the adjustment problem, however, we also address here the human resources policies that can be used by firms to deal with worker displacement policies such as advance notice of plant closings or large permanent layoffs, severance pay, and employerprovided training.
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From page 138... ...
In Sweden, large public investments (retraining and labor adjustment programs account for 2-3 percent of Swedish GNP) in training and retraining of the employed work force are combined with an elaborate system of vocational and technical education for labor force entrants and the unemployed.
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From page 139... ...
Employer-provided adult education thus tends to increase any differences in the educational attainment of workers that are already present when they enter the labor force. These conclusions about the skewed distribution of employer-provided adult education were confirmed by Tierney (1983)
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From page 140... ...
In sum, employers provide the bulk of skill improvement training in the United States, and such training tends to reinforce, rather than offset, inequalities in preemployment educational attainment within the work force. Inasmuch as technological change is likely to inflict the most serious dislocations (measured, for example, in terms of duration of
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From page 141... ...
and Japanese labor markets since the early 1950s, recent structural changes in the Japanese economy, which have resulted in some large layoffs, may alter the structure of Japanese labor markets and labor contracts in the future.
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From page 142... ...
In fact, there is little evidence of significant skill shortages for any extended period, although unemployment within the population receiving little job-related or basic skills training (the disadvantaged and unskilled) has been a persistent problem for much of the post-1945 period.
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From page 143... ...
Such data are important because the needs of these workers may differ substantially from those of the larger displaced worker population. 5The data on educational attainment in Chapters 3 and S underlie this assessment of the adequacy of basic skills training for labor force entrants.
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From page 144... ...
The most important function of public adjustment programs often is to provide job search assistance and information, rather than retraining, for individuals who may not have changed jobs for 20 years. Characteristics To assess the adequacy of policies that address their needs, reliable information on the characteristics of displaced workers is essential.
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From page 145... ...
Despite such transitional help, however, a substantial portion of this group of displaced workers may face difficulties in finding new employment because they lack the basic skills that ease the search for new jobs. Designing policies to aid this group is complicated by the difficulty of determining whether their displacement is permanent.
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From page 146... ...
For members of the second group, a combination of basic skills training, job-related retraining, and job search counseling and assistance could be of substantial help. Federal Training and Income Support Programs Since 1945, federal programs to aid displaced workers have consisted of the Manpower Development and Training Act (MDTA)
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From page 147... ...
Eighty-four percent of Title III program participants, on the other hand, received job counseling, and 66 percent received job search assistance. Overall, the General Accounting Office has estimated that Title III serves only 6-7 percent of the annual flow of displaced workers.
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From page 148... ...
In addition, Massachusetts provides up to 13 weeks of supplemental reemployment assistance benefits to workers unemployed as a result of a large layoff or plant closing who did not receive at least 90 days' advance notice and/or separation pay (Commonwealth of Massachusetts, Division of Employment Security, 1987)
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From page 149... ...
For a worker undertaking retraining, these benefits could provide as much as 26 weeks of income support; but many states prohibit or otherwise discourage individuals from receiving unemployment insurance payments while enrolled in retraining (Barton, 1986) in order to minimize the time an unemployed worker is drawing unemployment compensation.8 FEDERAL ASSISTANCE FOR UPGRADE TRAINING FOR EMPLOYED WORKERS The Perkins Vocational Education Act of 1984, the most recent revision to legislation authorizing federal support for state-level programs in vocational education, mandated that more than $90 million of the roughly $882 million in federal support for vocational education be spent by states on "adult" education, including "upgrade" training for employed workers and education in basic skills for adults.
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From page 150... ...
The conclusions of these studies also may not be applicable to displaced worker populations that are significantly different from those of the study populations. Finally, although case study evidence suggests that a large percentage of displaced workers suffer from basic skill deficiencies, none of these programs offered this type of training; thus, we have minimal evidence on the design and effectiveness of programs providing basic skills training to displaced workers.
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From page 151... ...
Generally speaking, we believe that there is too little emphasis on basic skills training within Title III. It is difficult to accept the proposition that the needs of workers with basic skills deficiencies can be addressed in 2 weeks of training, the average amount provided by Title III programs (U.S.
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From page 152... ...
Basic skills training for employed and displaced workers alike is not supported by the program as a matter of policy. Moreover, ETP's performance requirement (in its contractual agreements with training providers, the program requires that displaced workers be placed in jobs for 90 days prior to payment for the training provided)
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From page 153... ...
For example, one of the greatest impediments to participation in adult education programs is the reluctance of displaced workers to subject themselves to a classroom environment. Advanced teaching technologies, such as self-paced instructional workstations, can support individualized learning outside the classroom, thereby enhancing the attractiveness and effectiveness of basic skills and job-related skills training.
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From page 154... ...
General Accounting Office (1987b) of layoffs and plant shutdowns involving establishments with more that 100 workers found that severance pay was one of the most common forms of private adjustment assistance-37 percent of the respondents provided severance pay to their blue-collar employees, and 57 percent provided such compensation to white-collar employees.
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From page 155... ...
Although these programs are primarily funded by employer contributions, they also receive JTPA funds (Pascoe and Collins, 19851. Advance Notice of Plant Shutdowns or Permanent Layoffs as a Mechanism for Adjustment The best time to undertake programs of job search assistance, counseling, and retraining for workers is prior to their displacement.
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From page 156... ...
Because this evidence suggests that advance notice of plant closures and large-scale layoffs increases the effectiveness of publicly supported programs of worker adjustment assistance and reduces the average duration of unemployment after layoff, advance notice may reduce the costs to taxpayers of such actions. Plant shutdowns and large-scale layoffs that occur without advance notice appear to impose substantial additional costs on both workers and the public sector, by comparison with situations in which notice is given.
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From page 157... ...
The evidence on the benefits of advance notice for worker adjustment and the distribution of social costs, combined with evidence on its productivity effects, has led a large number of employer organizations, labor-management task forces, and public commissions to endorse voluntary advance notice. Private sector groups endorsing advance notice include the Business Roundtable (1983)
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From page 158... ...
Federal legislative proposals to require advance notice of plant shutdowns and permanent layoffs have accommodated several of these objections, typically exempting small firms (those with fewer than 5~100 employees) and allowing exemptions for "unforeseen circumstances." Although a number of Western European nations enforce mandatory advance notice regulations, in many nations these are combined with requirements for substantial severance payments to displaced workers, making a precise comparison with the impacts of notification alone very difficult.~4 '4The report of the Subcommittee on the Foreign Experience of the Secretary of Labor's Task Force on Economic Adjustment and Worker Dislocation (1986)
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From page 159... ...
employers (both union and nonunion firms) currently provide voluntary advance notice of plant closures and layoffs to their employees.
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