“The biggest challenge to workers in countries like mine today is technology,” former president Barack Obama recently said in South Africa. “We’re going to have to consider new ways of thinking about these problems, like a universal income.”
As it happens, there is a better solution for workers when “robots come for your job”: rapid private-sector retraining.A universal basic income (UBI) is an unearned cash handout from governmentactually from taxpayersto citizens regardless of employment or health status. Oakland, Calif., tested a UBI program in 2016; Stockton, Calif., will launch a pilot program in 2019; and Chicago officials are considering such a program. UBI gives everyone money with nothing expected in return, encouraging people to disconnect from the workforce and societydiminishing human dignitywhile creating unsustainable taxpayer obligations.
But warnings of “robogeddon” could be overstated.
According to consultancy McKinsey, up to 33 percent of the U.S. workforce may need to change occupations and learn new skills by 2030 due to digitization, automation, and advances in artificial intelligence. In contrast, Oren Cass, senior fellow at the Manhattan Institute, argues that “all of the economic data suggest that jobs are being destroyed by automation slower than ever.” Regardless of the disruption, retraining is a better response, and the private sector retrains better than government.
The U.S. government spends $17 billion a year on more than 40 workforce development programs across 14 agencies. Billions more are spent subsidizing postsecondary education$75 billion in 2013, according to Pew Charitable Trusts. Yet government retraining has failed dismally.
An independent 2016 analysis, Workforce Investment Act Adult and Dislocated Worker Programs Gold Standard Evaluation, found that federal programs do little to raise participant salaries and participants are less likely to obtain employment-based health insurance or retirement benefits. Perhaps most important, government programs fail to offer training in high-demand occupations. Another analyst concluded that federal programs are “largely a waste of time for the majority of job seekers and an enormous squandering of taxpayer dollars.”
For most people, returning to college is impractical and expensive: adults often face family obligations and significant forgone wages. Most traditional college programs take at least two years to complete and debt can pile up: average student-loan debt is $5,170 at community colleges and about $37,000 at four-year colleges. Graduates also report dissatisfaction with their degrees. Only 44 percent think their postsecondary education improved their employment chances. Students often find that technological advancements during their college years make their skills gap even wider when they graduate. Meanwhile, 45 percent of employers report that lack of skills is the main reason for unfilled entry-level jobs.
The solution for the persistent and widening skills gap is targeted and rapid retraining by companies with skin in the game. They are best suited to develop skill sets that match employment requirements now and into the future.
Of the $1.1 trillion spent in the United States each year on postsecondary workforce education and training, private employers spend the most, $590 billion. Since they bet their own money, they do a better job preparing workers for a rapidly changing tech-focused economy. That is why many companies set up their own training programs.
Many businesses, including Amazon, AT&T, and Seattle Genetics, now integrate extensive job-training programs into the standard hiring process, developing desired skills such as leadership, customer relations, and data analytics. And there has been a boom in accelerated learning programs (ALPs) in the tech sector to teach new skills rapidly, often in a “work-study” arrangement.
App Academy, Hackreactor, and Product School are just a few private ALPs, both online and brick-and-mortar, that teach high-level software skills in a short time at affordable prices and that practically guarantee students jobs. Scholarships could allow people of all income levels to enroll. The rise of ALPs in tech highlights the potential for vocational/technical education to close the skills gap rapidly as automation disrupts more industries.
Contrary to the former president, there is an alternative to universal cash handouts and pouring more money down the federal training rathole. Responsible governments will step aside and let private companies implement cutting-edge retraining to ensure that workers quickly acquire the skills necessary for success.