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Category: labor markets

Published on Leave a comment on The Right Way to Do Unpaid Internships

I'm going to guess if college students shunned unpaid summer internships, somebody who wrote this book would take them to task for imitating the Baby Boomers' alleged self-centeredness. I cannot but shake my head in disbelief at (and naturally blog about) yesterday's op-ed about unpaid internships by Anya Kamenetz in The New York Times.

Her thesis is to question whether the encouragement of unpaid internships is a good thing for the interns and for society at large. In her own words:

Let's look at the risks to the lowly intern. First there are opportunity costs. Lost wages and living expenses are significant considerations for the two-thirds of students who need loans to get through college. Since many internships are done for credit and some even cost money for the privilege of placement overseas or on Capitol Hill, those students who must borrow to pay tuition are going further into debt for internships.

Second, though their duties range from the menial to quasi-professional, unpaid internships are not jobs, only simulations. And fake jobs are not the best preparation for real jobs.

It is true that there are opportunity costs. (Shall I ask her to identify the activity for which ther are no opportunity costs, or should I just refer her to a discussion of revealed preference?) At Dartmouth, students may apply to the Rockefeller Center for a stipend to cover living expenses when they take an unpaid internship in the public or non-profit sectors. Several of the roughly 40 internships awarded each year are supported financially by alumni or alumni classes who specifically value the opportunities gained through working in an unpaid capacity in the public or non-profit sector.

Just as importantly, when students receiving financial aid apply for a grant, the Center contributes to or covers the financial aid contribution expected from the students' summer work activities, enabling them to focus on their internships without necessarily picking up a part-time job. So Ms. Kamanetz is overstating her case, at least where institutions like Dartmouth are concerned. If her younger sister at Yale, whose internship in New Orleans motivated her op-ed, did not have this opportunity, then her sister (like many others) should have tried to come to Dartmouth rather than Yale.

No one would deny the simple fact that students who come from well off families have more opportunities than those who come from less well off families. That point is irrelevant here, as long as we make sure that the internship is not relatively more expensive for the students from less well off families.

Her second point is sheer lunacy. I supervised a few interns while at CEA. I wouldn't call their experiences "simulations" or "fake." They were assigned projects commensurate with their abilities and academic preparation. Their contributions were generally quite good, and some were downright impressive. One of my regrets after my year at CEA was that I did not go work there as an intern or research assistant 15 years earlier while I was in college. It would have made me a better economist. I think the 10 students being sponsored by the Rockefeller Center this spring (on the page linked above) all have interesting opportunities ahead of them as well. Take a look at the full list from last year, along with a few in-depth profiles, in the Center's annual report.

At the Center, we have taken our support of internships further with the advent of our Civic Skills Training program, in which the Center's staff spends 5 days in Washington with a group of students before their internships to educate them about the public and non-profit sectors and to train them in the skills they will need to succeed in their internships. The Rockefeller Center picks up the entire cost of the training.

I would never presume to disparage a student's choice to work to earn money over the summer rather than work in an unpaid public or non-profit internship. But the suggestion that unpaid internships are not contributing substantially to students' development as young adults is preposterous and flies in the face of what thoughtful colleges are doing to support those internships.

UPDATE: Tony Vallencourt comments below and posts to his blog about the other parts of the Kamenetz op-ed, dealing with societal issues of a perceived lack of access to internships. I actually thought those were the weak points of the op-ed and so left them out of my post. Will Wilkinson takes Kamenetz to task for them on his blog in "The Baffling Mind of Anya Kamenetz."

Published on Leave a comment on Should I Stay or Should I Go?

On Wednesday, we learned of the agreement between General Motors and the United Auto Workers regarding a buyout plan:

G.M., staggering under the weight of $10.6 billion in losses last year, said it would offer buyouts and early-retirement packages ranging from $35,000 to $140,000 to every one of its 113,000 unionized workers in the United States who agreed to leave the company.

When firms are in financial distress, they need to get their creditors--typically private banks and public debtholders--to write down the value of their claims. If existing creditors are willing (or can be coerced) to do this, then the firm faces a better prospect of getting new creditors to help it finance value-enhancing projects. (I am still waiting to see what these might be for G.M.)

In a standard workout from financial distress, the firm enters an agreement with a bank and then makes an exchange offer to its public debtholders to give them new securities in exchange for their old ones, if a sufficient number of them accept. For an exchange offer to work, it typically has to shorten the maturity or raise the seniority of the new debt relative to the old. Those who opt for the exchange have to be able to "get in line" ahead of those who don't in the event that not all of the firm's creditors will be repaid in full. The more workers who take the buyout, the less money will be available in the near future for those who did not take it, in the event that G.M. doesn't recover.

In G.M.'s case, its labor contracts are so costly and so rigid that its unionized workforce resembles a major creditor, and what they have been offered resembles an exchange offer. So each of the 113,000 workers is making an individual assessment of whether they are likely to receive more money by taking the sure payment now or by seeing what uncertain payments they get when G.M. enters bankruptcy or recovers. As a Reuters story points out:

Several union officials said workers who have been thinking about a career change or those worried about the auto industry overall are the ones considering the offers.

The story also notes that employee reactions are mixed:

Reactions to GM's buyout offers, announced on Wednesday, varied among workers, with younger employees worrying about their future because the offers would not include health benefits, and some older ones getting ready to retire.

But some senior GM workers might just refuse to go.

Terry Brumley, 63, who works at the Corvette plant in Bowling Green, Kentucky, has been with GM more than 40 years.

"I'm not taking the money. I can raise a garden, go to dinner with my wife and go fishing, and still have a job. So why should I retire?'' he asks, adding that he sees himself working for at least another 10 years.

And, to show some of the problems with getting in the habit of offering buyouts, consider:

"Members of high seniority are very interested,'' Eldon Renaud, president of the United Auto Workers Local 2164 in Bowling Green, Kentucky, said. "There were a lot of people that were ... holding on to see if there was going to be a buyout offer.''

On this sort of dynamic inconsistency, more later.

Published on Leave a comment on Compensation in NYC

Under normal circumstances, this news (h/t WSJ) would have generated a sternly worded post:

NEW YORK (AP) -- The president of the city's transit workers union said its leaders were ready to go back to the drawing board after 33,000 bus and subway workers narrowly rejected a tentative contract deal reached after last month's crippling strike.

Workers on Friday rejected the contract by just seven votes, with 11,234 against and 11,227 in favor. The vote was a sharp rebuke to Transport Workers Union local president Roger Toussaint, who persuaded workers to walk off the job in December but could not muster enough support for the deal.

[...]

The rejected contract would have provided raises of 3 percent in the first year, then 4 percent and 3.5 percent in the following two years. But it would have required the workers for the first time to contribute 1.5 percent of their salaries toward health care premiums.

The rebuke is hard to deliver on a day when the same paper includes this:

Alan G. Hevesi, the New York State comptroller, announced yesterday that Wall Street bonuses were estimated to hit a record $21.5 billion for 2005, surpassing the previous record of $19.5 billion, set in 2000. Those bonuses were driven by record profits at many of Wall Street's major investment banks, including Goldman Sachs, Bear Stearns and Lehman Brothers.

The Street's munificence will be felt throughout New York: Mr. Hevesi estimated that New York State would collect $1.5 billion in tax revenue from those bonuses, and New York City about $500 million.

"Wall Street continues to be critically important to the economies of both the city and the state," he said.

I would still criticize another unlawful strike, but it's hard for the city and state to plead poverty in denying the MTA union workers' request for more compensation.

Published on Leave a comment on November Employment

The top line numbers for this morning's November employment report are net 215,000 payroll jobs added and a reported unemployment rate that stayed at 5.0 percent. On the latter, only some fortunate rounding prevented the number from ticking up by a tenth (4.95 to 5.04 percent). On the former, the BLS has resumed its usual methods, with no accommodation for lingering effects of Hurricane Katrina. Over the past 12 months, the economy has added about 2 million payroll jobs.

The 215,000 number doesn't excite me this month, because the private workweek fell by 0.1 hour. As I've noted in past discussions, that reduction in the workweek offsets the added labor input of about 300,000 new workers (134 million total x 80% in private production or non-supervisory jobs x 0.1 hour reduction / 33.8 hours on average). So overall, the economy didn't appear to increase its demand for labor input to production in November. The reduction in the workweek changed a small increase in hourly wages to a small decrease in average weekly earnings, even measured in nominal rather than real terms.

The most interesting feature of this month's report is the information from some special questions in the household survey on persons displaced by Hurricane Katrina. There are nearly 900,000 persons 16 and over evacuated for Katrina, split evenly between those now in the same residence as in August and those in a different residence than in August. The employment-to-population ratios are 46.1 and 41.6 percent for the two groups, respectively, compared to a national figure (not seasonally adjusted) of 62.9 percent. If the national figure is a reasonable proxy for what the Gulf Coast might be experiencing absent the hurricanes, that suggest continued unused labor capacity of about 30 percent (1 - ((46.1+41.6)/2)/62.9) among those people evacuated.

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Published on Leave a comment on Federal Brain Drain

From the Partnership for Public Service:

The loss of experienced personnel is one of the surest ways to undercut an organization's effectiveness. When this loss occurs rapidly and is concentrated in critical positions, the results can be devastating. The departure of top-level employees at the Federal Emergency Management Agency is often cited as a key reason it struggled to respond effectively to Hurricane Katrina. Similar brain drains are likely to occur across government as 44 percent of all federal workers become eligible to retire over the next five years, with 61 percent reaching eligibility four years later.

Large-scale turnover. The federal government is particularly vulnerable to the coming baby boomer retirements. While the average age of the American worker has increased over the past decade, the federal civil service has twice as many workers over age 45 (60 percent) as the private sector (31 percent). According to U.S. Office of Personnel Management (OPM) estimates, among all full-time permanent employees in the federal workforce as of October 2004, 58 percent of supervisory and 42 percent of non-supervisory workers will be eligible to retire by the end of FY 2010. In addition to these retirements, well over 200,000 federal employees are expected to resign over the next five years, resulting in a potential loss of nearly 900,000 workers.

Loss of key employees. The impact on government effectiveness will be compounded by the concentration of turnover in high-level and hard-to-staff positions with specialized skills:

  • 40 percent of Department of Homeland Security managers and program analysts will reach retirement eligibility by 2009.

  • 42 percent of the Senior Executive Service is projected to retire by 2010.

  • 87 percent of claims assistants and examiners in the Social Security Administration and 94 percent of their administrative law judges will reach retirement eligibility by 2010.

  • The Federal Aviation Administration's air traffic controller attrition rates are estimated to triple by 2012.

The references to FEMA and the Department of Homeland Security are particularly worrisome.

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Published on Leave a comment on Significant but not Overwhelming

So says the Congressional Budget Office in its preliminary report on the likely economic impact of Hurricane Katrina on economic growth. Quoting from the opening paragraph of the report:

Katrina could dampen real gross domestic product (GDP) growth in the second half of the year by ½ to 1 percentage point and reduce employment through the end of this year by about 400,000. Most economic forecasters had expected 3 percent to 4 percent growth during the second half, and employment growth of 150,000 to 200,000 per month. Economic growth and employment are likely to rebound during the first half of 2006 as rebuilding accelerates.

How do they get these numbers? Start with an overestimate of the affected areas:

The gross state product of Louisiana is about 1.2 percent of U.S. GDP, and that for Mississippi is about 0.7 percent. If half of that product were lost for three months (September to November), the level of real GDP would be lowered by about 1 percent from what it otherwise would be, cutting about 1.3 percentage points from the annualized growth rate for the third quarter and about 2.7 percentage points from the fourth quarter.

They then argue that production of the key industries in those areas will be unlikely to be affected for that long, putting the impact at about 1 percentage point (off an annualized growth rate) in each quarter. They then conduct an analogous exercise to estimate the loss in jobs:

Employment for September will decline significantly—estimates of the impact range from 150,000 to half a million—as a direct consequence of the hurricane. The Bureau of Labor Statistics (BLS) may or may not be able to estimate the size of this effect when it releases the September data on October 7. Employment will increase in subsequent months, as workers return home and businesses reopen and as reconstruction activity gathers steam. The large-scale relocation will generate additional demand for workers in receiving communities; some of those jobs will be filled by the evacuees themselves. Once New Orleans residents are able to return home, the net effect on the level of employment will be positive, as reconstruction activity continues.

A reasonable first pass at the questions they were asked. It is not CBO's fault that rebuilding after a natural disaster is one of the more obvious times when GDP--as a measure of economic well-being--comes up short.

Published on Leave a comment on August Employment Report

First Friday of the month, so the employment report is out for last month. Despite all of the news about Katrina, there is no impact yet, as the hurricane hit Florida and the Gulf after the survey reference week (the one including the 12th of the month). Following an earlier example, let's break it down, starting with Table A:

1) Top line number: Change in nonfarm employment measured from the establishment (or payroll) survey came in at +169,000.

2) Revisions to the top line number from previous months: Each month, the establishment survey revises its prior two months of data, as more establishments report in. So the last number not revised is for May (reported in last month's release), when payrolls were 133.413 million. Payroll job growth for June and July were revised up, by 9,000 and 44,000, respectively. So the last three monthly numbers (with the last two subject to further revision in the coming months) are 175k, 242k, and 169k, for a total of 133.999 million employed in the establishment survey. A three-month average of 195k per month looks pretty solid.

3) Don't forget the workweek: The employment report also reports the length of the workweek for private production or nonsupervisory workers. This month, it held steady at 33.7 hours. Updating some calculations in my earlier post, a change of one tenth of an hour in the average workweek would be the equivalent of a change in the labor input of about 318,000 workers. That's larger than the typical change in the number of bodies, so always watch the workweek (and it's revisions, which had no effect this month).

4) Earnings growth: The survey also reports the average hourly wages and average weekly earnings for private production or nonsupervisory workers. Since these numbers are revised over the subsequent two months as well, go back to May (in last month's report) to find values of $16.03 and $540.21, respectively. The August figures of $16.16 and $544.59 reflect growth at an annual rate of 3.3% (they are the same because hours haven't changed). That may be a little bit better than inflation--inflation ran at a 3.5% annual rate from January to July but only a 1.9% annual rate from April to July. We won't know for sure until the August CPI estimate comes out.

5) Unemployment Rate: The top line number in the household survey is the unemployment rate, which is reported to have fallen by 0.1 percentage point, down to 4.9 percent of the labor force. (The actual change is 0.08 percentage point, rounded up to 0.1.)

6) Other Ratios from the Household Suvey: The decline in the unemployment rate is due to an increase in household employment of 373k, a decline of 106k in unemployment, and an increase of 1k in those not in the labor force. So this is going to mean good things for the labor force participation rate and employment-to-population rate. Both are up by 0.1 percentage point, to 66.2 and 62.9, respectively.

7) Caveats to the Household Employment measure: Once again, we get a pretty large disparity between the household and payroll measures of employment growth (373k versus 169k). Part of this is due to different samples (e.g., household survey includes the self-employed, establishment survey counts multiple job holders). The rest is that they are both estimates of an underlying population number. In general, the establishment survey is to be preferred for the purpose of counting the change in the number of jobs, because that number is estimated more precisely in the establishment survey (it's a bigger survey and it uses administrative data).

8) Alternative Measures of Unemployment: The full list is given in Table A-12. All but one shared the decline of 0.1 percentage point that the main number showed. We can also construct another one based on reclassifying all of those who are not in the labor force (i.e., not actively looking for work) but who do "want a job." This group fell from 5015k to 4823k between July and August. If we reclassified them as unemployed (and thus in the labor force), this augmented unemployment rate would have fallen by about 0.2 percentage point, from 8.1 to 7.9 percent.

9) Duration of Unemployment: Some commentators also look at the duration of unemployment, reported here. It lengthened over the month, from 17.6 to 18.9 weeks on average and 9.0 to 9.4 weeks at the median. The fraction of the unemployed who have been unemployed for 15 weeks or longer rose from 32.8 to 35.8 percent, and the share unemployed for 27 weeks or longer rose from 18.7 to 19.2 percent. These numbers are all down slightly relative to August 2004. The recent changes reflect a greater share of the short-term unemployed either finding jobs or leaving the labor force than the long-term unemployed.

Plenty of other stuff to look at, but these are the highlights. For Fed watchers, it will be interesting to see whether the anticipated economic weakness due to Hurricane Katrina or these retrospective data on a fairly strong labor market will prevail in the decisions to keep raising short-term interest rates.

Linked at Outside the Beltway Traffic Jam.

Published on Leave a comment on Andrew Stern Goes 1 for 2

In an earlier post, I wrote:

My ideal union is one that helps the workers communicate their grievances and suggestions to management and shareholders and, more importantly, helps the workers invest in more skills to boost their productivity, whether at their current jobs or their next ones.

That wasn't meant to exclude other good ideas. Writing at the Huffington Post, SEIU President Andrew Stern calls attention to efforts his union (one of those breaking away from the AFL-CIO in the earlier post) has been making to help improve the luxury condo market in South Florida.

Condo workers are finding out that they have a lot in common with condo residents who also get taken for a ride by property management companies like Continental. Fees keep going up, and Continental's parent company makes money by "cross-selling" additional services such as painting, landscaping, and pool cleaning.

Elected public officials, condo residents, and condo workers have been holding public forums and pushing for legislation requiring licensing, fiscal and ethical standards, and full disclosure of contracting relationships.

That’s the new union movement. Giving a voice to the voiceless. Uniting with community groups for everyone’s benefit. And making sure that working people have the tools and training they need to provide a service they can be proud of.

Serving as monitors on behalf of owners against allegedly corrupt practices by management companies is another economically valuable role for unions to play. It would allow the members to earn the above-market wages they would like to be paid. Good for them.

In other union news, Alan Murray writes in the Wall Street Journal that today:

[A]t 34 news conferences in 24 states across the U.S., a group called Wake-Up Wal-Mart will paint Sam Walton's company in black. The group -- started by the United Food and Commercial Workers International Union, and backed by teachers' unions -- will call for a Back-to-School boycott of Wal-Mart stores, charging the Bentonville, Ark., company with paying poverty-level wages, providing skimpy benefits and flouting labor and discrimination laws. (Never mind the fact that it sells a large box of crayons for 25 cents.)

Boycotts that don't involve coercion, libel, or slander are fine in my book. I don't think it will work, but there's nothing wrong with assembling for that purpose. Later in the article, we read:

To run the new effort, the UFCW hired a refugee from Howard Dean's political campaign, Paul Blank, who operates out of cramped offices on Washington's K Street, where the walls are covered with maps and hand-drawn anti-Wal-Mart signs. Meantime, the Service Employees International Union, another break-off union, has established a rival site, Wal-Martwatch, with support from liberal groups including the Sierra Club and Common Cause. "We have no intention of trying to organize Wal-Mart workers," says SEIU President Andrew Stern. "The purpose is to change Wal-Mart's business model -- a business model that rewards shareholders and executives and doesn't reward workers."

Economics ... professor ... meltdown. Wal-Mart's business model is to squeeze every last piece of inefficiency out of the retail supply and distribution chain. That includes not paying its workers (at all levels) any more than what is necessary to get them to perform their jobs at Wal-Mart rather than their next best opportunity. It is amazingly successful, and it does creates enormous value for Wal-Mart's customers and its shareholders, which the latter (presumably happily) share with the executives who oversee that process and all other workers who contribute to it. That's the workers' reward. As long as Wal-Mart operates within the law and without coercion, this is how the retailing business is supposed to work.

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Published on Leave a comment on At Least They’re Not on Strike

Following up on his report last week about strife within the AFL-CIO surrounding its annual convention, New York Times reporter Steven Greenhouse writes today that, in addition to following through on the boycott:

Officials from the Service Employees International Union and the International Brotherhood of Teamsters who insisted on anonymity because a formal announcement had not been made said their unions would announce on Monday, the day the convention begins, that they were quitting the federation. The service employees, with 1.8 million members, and the Teamsters, with 1.4 million, are two of the biggest unions in the A.F.L.-C.I.O. They contribute $20 million each year, or about one-sixth of its budget.

In addition, Joe Hansen, the president of the United Food and Commercial Workers, indicated that his union would probably also leave, despite Mr. Sweeney's efforts to persuade them to stay.

"We are certainly willing to listen to anything they want to say," Mr. Hansen said. "Our differences are so fundamental and so principled that I don't think there will be any change in course."

Watching the language in the article, there is one case of calling the defectors "insurgents," but no mention of "hubris" by anyone. The approved talking point by the union leaders seems to be to accuse the defectors of taking a "My way or the highway" approach.

It's hard to predict what will come of this. It seems to be a case of the largest voices in the coalition wanting a voice that is commensurate with their size and financial contributions. That voice seems to be for more activism in union activities. A press release a couple of months ago provides details about what the group specifically requested of the AFL-CIO. These two paragraphs seem to get to the heart of the matter:

Terence M. O’Sullivan, General President of the Laborers’ Union, said: “Our unions believe that there are no easy fixes, but we will not be content with failure. The only solution to the crisis facing working people is to bring millions more workers into our movement, and that requires a single-minded focus on organizing.”

According to John Wilhelm, President of the Hospitality Division of UNITE HERE: “We have shown in our unions that we can win and grow in this climate – and even win big. Now is the time, maybe our last opportunity, to move the entire labor movement into a determined growth program. The current leadership of the AFL-CIO is calling for more of the same, and that won’t cut it. We need a complete change of course.”

As a matter of principle, I am not in favor of coercive monopolies in any aspect of the economy, whether by firms or by workers. So I have no problem with collective bargaining or the right to strike (peacefully), but nor do I think it should be illegal for employers to replace striking workers permanently if they so desire.

The most interesting specific item called for in the press release is this one:

• Actively support mergers that unite workers by industry.
The AFL-CIO should play an active and direct role in working with affiliated unions to facilitate mergers – subject to approval by the affected members — that lead to increased power for workers in the same or complimentary industries. A proactive, industry-based merger policy – whose goal is to build worker bargaining power — will give workers the chance to unite their strength before overwhelming economic and political forces have weakened their unions to the point that it may be too late for mergers to make much difference.

So it is here, if not sooner, that I part company with the defectors. Hard-wired into an economist with libertarian tendencies is the view that the best protection for workers is the presence of a competing firm to whom they could sell their services. Instead, this group feels that the position of "workers" can be enhanced by actively limiting that number, with a presumption that the relative bargaining position of the workers in the single entity is greater than with two separate entities.

That's a shame. There is a real role for unions to play in promoting the well-being of workers that has nothing to do with this sort of rent-seeking behavior. My ideal union is one that helps the workers communicate their grievances and suggestions to management and shareholders and, more importantly, helps the workers invest in more skills to boost their productivity, whether at their current jobs or their next ones.

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Published on Leave a comment on Skills Beget Skill

Following the advice of Arnold Kling and Don Boudreaux, I spend a good chunk of time--very productively--reading this interview with Jim Heckman in the Minneapolis Fed's The Region. Harkening back to some earlier posts about Freakonomics and what's right and what's wrong with the economics profession, these paragraphs resonated with me:

We tell stories in nursery school, such as the story of the tortoise and the hare and the story of the little train that could. I read these to my kids, and they were read to me. All these folk tales, all these pieces of wisdom, the fact that a mother's love matters and all this stuff, we tend to dismiss them in our formal models of education policy. We economists like to write down specific technologies and make things very precise. That's a useful discipline, and that's what I am doing with various coauthors. We are making this subject precise. But sometimes I have my doubts. Some of what economists do is to explain to fellow economists what most intelligent people already know. A lot of what economists do is explain to themselves what the rest of the world already knows. There's a real risk of being caught up in that.

However, it's important for policy purposes to make ideas precise, to try to understand which interventions are the effective ones. So I don't think our research is just putting simple ideas into the terminology that economists like. I think there is scientific merit in what we are doing. In fact, I've found that in response to some of the papers we have written, where we write about the critical and sensitive periods of child development, and we use the economists' technologies to explain these ideas, the neuroscientists get very excited. I've had several prominent psychologists coming up to thank me at professional meetings of psychologists for helping them to organize their way of thinking about their life's work. Economics can be very powerful in taking ideas, organizing them in the forms of technology, intervention and basic causal factors. That's why I feel there's a lot for economists to do in this area. But there's also a lot to listen to as well.

Big ideas and good scholarship should cross the conventional disciplinary boundaries. On the substance of the economic issues that Heckman is discussing, I think his views about the importance of noncognitive abilities in generating economic outcomes and the interactions between genetic and environmental factors are fascinating and will grow in importance as more research is done. Here is an insightful part of the Q&A about job training programs:

Region: Is job training effective in any form? Are there any types of programs that do work?

Heckman: Most job training is actually being done in private companies, not in the public sector. And who is more likely to get private job training? People who have higher cognitive and oncognitive skills—the same abilities that helped them get the job in the first place. These people earn high returns to private job training.

Region: So, it's a selection issue.

Heckman: Yes, it's a selection issue. It's a consequence of the dynamics of skill formation that we talked about earlier—that skill begets skill. Public training programs are aimed at the bottom of the barrel, at people who've been put out of schools, or maybe they've been given high school degrees through social promotion but can barely read or write. And the typical, short-term job training program tries to remedy lifetime deficits in a few months. They are based on the hope that society can solve 17, 18 years of neglect of a child with a short-term program that can transform people who have grown up in extreme disadvantage.The dynamics of human skill formation are such that high levels of skills acquired early in life make it relatively easy to acquire later skills; they put the child in a position to benefit from later interventions. It's the self-productivity idea we discussed earlier. There's a growth trajectory, and people with different early conditions start to diverge in their development. Those who receive skills early on are more likely to get jobs and enhance those skills through private job training. Those who don't get those early skills are unlikely to benefit much from short-term public training programs later on.

Enjoy the whole thing.

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