Retraining Displaced Workers

This brief describes the unique challenge that displaced workers face due to the permanent elimination of a job and the failures of current training programs. To address long-term earning losses, the authors put forth “six integrated proposals to correct weaknesses in the current training system for displaced workers, increasing both the quantity and the value of training” (p.3). The paper concludes with a discussion of the costs and benefits of the proposal’s key questions and concerns. (Abstractor: Author and Website Staff)

The authors determined the following in regards to displaced workers: • “For workers displaced in mass layoffs and plant closings, the consequences of being laid off usually extend far beyond the period when they are unemployed. When they do find new jobs, they face substantial and highly persistent declines in their earnings” (p.1). • “Earnings losses of displaced workers are not related to national economic growth but rather to waning demand for a certain set of job- or industry-specific skills” (p.1). • “Workers who possess skills in declining industries or sectors experience lower earnings, even after they are reemployed full time and even in expanding job markets, because their old skills are often difficult to transfer to emerging and grown sectors” (p.1). • “Although workers may still experience significant earnings losses relative to their previous positions, training can be a socially desirable investment that can help trim these losses, and can have positive effects on their communities. This is an important form of social insurance for workers who experience earnings losses due to structural changes in the economy. • In addition, workers may underinvest in training due to credit constraints, poor information about returns, and/or because some of the benefits accrue to society through tax receipts and lower social insurance payments” (p.1). The authors recommend: • Providing Pell Grants for displaced workers. • Creating a recession community college fund provided by the federal government to support training programs at community colleges. • Reforming funding mechanisms for community colleges to encourage course offerings in technical subjects with the highest returns. • Targeting training for displaced workers who are prepared to benefit from retraining. • Linking financial aid to the performance of the institution and/or individual training recipients. • Disseminating and evaluating research on training programs for displaced workers (p.3-5). (Abstractor: Author and Website Staff)

• Last Updated:
• Created:
• Resource Publication Date: 2010
• Author(s): LaLonde, Robert; Sullivan, Daniel
• Organizational Author(s): The Hamilton Project, Brookings Institute
• Funding Source: Funding source not identified
• Resource Availability: Publicly available
• Posted by: Justin Venneri
• Posted in: Workforce System Strategies