If the chatter coming out of Washington D.C. trade associations is to be believed, American businesses are investing a lot these days in their workers.
“AT&T will only be as good as the people we employ,” proclaimed Randall Stephenson, the chairman and chief executive of AT&T and chairman of Business Roundtable, in a press release announcing a new guide to employer training programs. “We are using these programs to widen, develop and diversify the talent pipeline.”
The examples the guide cites are manifold. The glossy brochure features programs administered by a hotel chain, a property management company, and the restaurant industry, among others. Meanwhile, the Chamber of Commerce has been pushing the need to think of recruitment like any other kind of supply chain: Something that needs to be actively managed, involving partnerships with local schools and more opportunities to learn on the job. Corporate philanthropies, like the JPMorgan Chase foundation, have also been advertising their investments in “demand-driven skills training.” Even Walmart has gotten in on the action, with a $100 million commitment to develop its front-line workforce.
But setting aside the fanfare and anecdotes — how much money has American business been putting into employee training overall, and how has that changed over the past few decades?
The question is an important one for the American economy. The days of widespread in-house training — where factories took kids fresh out of high school and trained them up into careers, often with the help of a union — are mostly gone. Much of that responsibility has been shifted onto the shoulders of workers, leading to an abundance of college graduates with few marketable skills and mountains of college debt.
Now, with technology changing ever faster, companies need workers who are constantly learning in order to keep up. Businesses often complain that the education system hasn’t evolved quickly enough to provide them with qualified candidates, and so additional investment will likely be necessary to get workers up to speed — investment that companies now say they’re making.
Whether that’s true, however, is difficult to pin down. The most recent government data comes from 2009, when the Census asked individuals whether they had received training from their employers. A forthcoming study by University of Nevada professor Jeffrey Waddoups uses that data to show a 28 percent decline in training between 2001 and 2009, which he thinks has to do with larger pressures on corporations.
“The 2000s have been a period when corporations, especially big companies, are disinvesting in everything,” Waddoups says. “They’re not investing as much capital, and also not investing as much in human capital. There’s a strong pressure to increase profitability in the short run, and one of the ways you cut costs is by cutting the amount you’re spending on training and people.”
Since 2009, there is some consultant-generated data suggesting a recovery in employer-provided training, but nothing comprehensive. The Bureau of Labor Statistics last surveyed employers on the question back in 1995. And even people who study the issue disagree over what’s going on.
"No one thinks [training] went up in the Great Recession,” says Peter Cappelli, director of the Center for Human Resources at Wharton Business School. "I don't believe any of the corporate sponsored data, not so much that I think they are trying to bias it but they just ignore basic statistical issues such as sampling.” Such surveys might just ask companies already interested in training, for example, and thereby bias the results.
But Anthony Carnevale, director of Georgetown University’s Center on Education and the Workforce, says that companies have been investing more in their employees over the past two decades — at least the employees with skills that are hard to replace.
“The quantity of learning on the job just goes up as the economy gets more skill intensive,” Carnevale says. That’s been the story of the last three decades, as manufacturing jobs became more sophisticated and less plentiful, and knowledge-based service jobs took their place. “It’s hard to argue that employer training is going down, given the standard theory of what’s happened since ’83.” Carnevale’s Center put out a report this year based on the 1995 data suggesting that employer spending on formal education has increased by 26 percent since then.
The government could add additional clarity by actually researching the issue. President Obama asked for funding to update the survey of employer-provided training in his 2016 budget request, but federal government’s primary data collector has had a hard time landing funding these days — Congress has cut the BLS’ budget by 11 percent over the past five years. Now, some corporate foundations may be trying to help out.
"Foundations are saying, ‘we have to have this information, we can’t make sense of this environment without it.’ So if we have to help pay for it to start moving this forward, we’re willing to do that.”
— Dewayne Matthews, Lumina Foundation
On Tuesday afternoon, officials at the Bureau of Labor Statistics met with representatives of some of the country’s biggest corporate philanthropies, along with some think tankers and academics. Groups including the JPMorgan Chase Foundation and the Walmart Foundation been frustrated that the government has so little solid information about employer-provided training, and approached the BLS with the idea of possibly helping to foot the bill. (The JPMorgan Chase Foundation declined to comment, and the Walmart Foundation said that while it was unable to attend Tuesday’s meeting at the BLS, it is “very interested in understanding more on employer investment in training programs.”)
“None of us set out to do this, wrote our strategic plan and said ‘let’s fund the BLS,’” says Dewayne Matthews, a vice president of the Lumina Foundation, which was also present at the meeting. “But what’s happened is these data needs are so pressing that the foundations are saying, ‘we have to have this information, we can’t make sense of this environment without it.’ So if we have to help pay for it to start moving this forward, we’re willing to do that.”
Discussions are still very preliminary. BLS spokeswoman Megan Kindelan says the meeting on Tuesday was more of a “brainstorming/information session.” "The issue of funding is not on the table at this time,” Kindelan wrote in an email. “Perhaps it will be, but it was not discussed at this meeting today."
That’s in part because they’re still figuring out how to update the study. Lumina thinks the old methods of data collection — which captured “formal training” at educational institutions and “informal training” on the job — are outmoded. The distinction between those two categories is much more blurry these days, and employers are shifting to more of a “competency-based” system of evaluating what people know, rather than what degrees they have.
“Because it’s changed so much, the methodology needs to be updated,” Matthews says. “That’s why this seemingly simple question — ‘why don’t we just update this skills data?’ — ends up becoming so complicated. Because the basic reference point for the conversation has changed.”
The BLS does occasionally accept reimbursement from outside entities. Usually, it’s other governments. Occasionally, it’s non-profits; the Aerospace Industry Association recently paid for some additional sampling of aerospace data in the employment cost index, for example. The Commerce Department also recently announced a partnership with three foundations and Case Western Reserve University to fund a study on the financial benefits of apprenticeships.
That could start happening a lot more often soon. Matthews says foundations are also interested in helping to underwrite data collection at the National Center for Educational Statistics and the Census to get better information on certificate programs, as well as similar work with state governments.
That’s disturbing to Scott Klinger, director of revenue and spending policies at the Center for Effective Government, who says he hasn’t heard of private entities funding federal statistical agencies. “They used to do this directly, through their taxes,” Klinger says, of corporations. “It’s kind of the private sector overtaking the public space and the public sphere. So I think it’s very troubling.”
Even Georgetown’s Carnevale has a problem with the idea of foundations funding research that carries the imprimatur of government. "I can tell you, your funders do influence you, as much as I would like to say they don’t,” Carnevale says. “In the back of your head, they’re there. Suddenly, you’ve got clients.” (Incidentally, Carnevale’s own report on employer-provided training was supported by some of the same foundations that backed the Business Roundtable’s guide to work-and-learn opportunities.)
Matthews, of Lumina, says that the government’s own rigorous standards are a firewall against any undue manipulation — and also that they won’t be doing anything sneaky.
“The only real answer to that is transparency,” Matthews says. “If the process is an inclusive process, I think that answers that concern, that various stakeholders are engaged and involved and given an opportunity to participate.”