How To Train Americans For Good-Paying Jobs Without Rip-off Schools, Without Student Loans & Without Spending Taxpayer Money
By David Grace (www.DavidGraceAuthor.com)
- There are lots of skilled jobs that are unfilled.
- There are lots of people who want to work but don’t have the training that the available jobs require.
- Millions of people have tried to get job training by attending for-profit schools with borrowed money and instead have been ripped-off with big loans and no jobs. Student-loan debt is now over $1.3 Trillion and what have we gotten for it?
How did we get into this mess and how can we get out?
The Idea That Other People Should Pay To Train Your Workers
American corporations have historically depended on other people to pay for their worker training. For most of our history most corporate employees have been unskilled or semi-skilled workers who required little or no training beyond the ability to read and write. Since the public schools handled that task, business got into the habit of expecting the vast majority of its workers to just show up at the door, ready to work.
The relatively low percentage of skilled employees — accountants, typists, engineers and the like — were trained either at public expense in state-run colleges or at the individual’s expense through family support or government subsidies such as the G.I. Bill.
As long as the percentage of skilled workers needed was relatively small, corporations didn’t think they had to train their own employees. The idea that training their own skilled workers was “somebody else’s job” became ingrained in American business culture.
But today the ratio of skilled to unskilled workers has changed and most businesses now need a material number of trained employees. But they still think that training those skilled workers is somebody else’s job.
So, while corporations complain that they can’t find the skilled workers they need, they still expect the taxpayers or the workers themselves to pay for their own training, or they want to import those already-trained workers from other countries where foreign people have paid for that training.
Companies still haven’t recognized the connection between the increase in the number of unfilled high-skill jobs and the failure of the “somebody else should pay to train my workers” philosophy.
Problems Caused By Expecting Someone Else To Train Your Employees
This change from needing a small percentage of skilled workers to a material percentage of skilled workers has left America with three big problems:
- There is a shortage of skilled workers
- There is a huge student-loan debt
- There are large numbers of people who want to work but whose lack of training prevents them from being able to get a good-paying job
This situation is not only bad for individuals, it’s also bad for business because the shortage of skilled workers both curtails production and also drives up skilled-worker wages.
There are solutions to these problems but they require two things that American business finds difficult:
- Accepting that the days of others paying the costs of training your workers are over, that is, accepting that you have to pay the cost of training your own skilled employees and folding that cost into the pricing of your products just like any other cost of production, and
- Building a new employee-training infrastructure.
Today’s For-Profit Schools Are Inherently Terrible
For-Profit Schools Have An Incentive To Sign Up Unqualified Students
When job training is a for-profit service, anyone and everyone, irrespective of intelligence, talent or ability, is a sales prospect. They aren’t students. They’re customers.
When every warm body in a classroom represents money in the school’s pocket, the school is happy to sign up students whose lack of education, talent, and/or intelligence makes it between unlikely and impossible that they will ever get a job in the field in which they’re being trained.
The Worse The Training, The Greater The Profit
The less the provider spends on actually providing the training, the more profit it makes.
The more expensive it makes the training, the more profit it makes.
Once you’ve got the student’s money, your primary desire is to spend as little as possible on providing the training while charging the student as much as possible.
Since you’re selling a product that the customer won’t know is deficient until after the course is over, you can cut corners in a dozen different ways, none of which will be evident until the student “graduates” and tries to get a job.
By then his/her money is all spent, and, because the training is financed by a third party lender, the student still owes the money even though the training he/she received is worthless.
Change The Way For-Profit Schools Are Paid
You fix the problem of schools recruiting unqualified students and the problem of schools providing inferior training by giving them a financial incentive to
- limit enrollment to people who have the aptitude, education and intelligence to be able to succeed in the chosen field and
- provide quality training that is likely to result in the student actually getting a job in their chosen career.
You do that by preventing the school from being paid from any source other than a share of the wages the student will earn in the occupation the school trains him/her to perform.
By law, the school’s compensation would be limited to no more than 33% of the student’s take-home pay from a job in the field for which the school provided training for no more than four years of employment, with the further limitation that the first year of employment in that field can be no more than three years after the date of graduation.
Of course, schools could charge less than 33% over a period of less than four years but never more.
If the student can’t find work in the field in which the school provided training then the school won’t get any money.
If the pay the student receives is low then the school’s compensation would similarly be low.
If the training is poor, if the school’s reputation is poor, then the student won’t be able to get a job and the school won’t get any money.
This system will give the schools an incentive to be selective in their enrollment policies, realistic in the fields of study they offer, and rigorous in their training.
This is similar to the legal profession’s contingent fee payment system — when a lawyer takes a case on a contingent fee his/her only compensation is a share of the amount recovered.
The law would allow the school to file a Request For Notice with the Social Security Administration so that the school would be notified of the name and address of each company that employed the student during the agreed period of time.
The school would have the right to file a Payment Lien with the student’s employer requiring the employer to directly pay the school the agreed percentage of the student’s take-home pay for the agreed period of time.
For example, if the student applied for training as, say, a medical technician of some sort, the agreed compensation might be twenty-five percent of the student’s take-home pay for any job he/she gets in the medical tech field within three years after the date of graduation with payments to be made for three years of such employment.
The payments to the school would be prorated if the student completed at least half the course. For example, if the student completed only half the course then the school would get 12.5% of his/her take home pay earned from a medical technician’s job during three years of employment.
NOTE: The Holberton School in San Francisco admits students based on on-line tests which evaluate problem-solving skills, the ability to collaborate and perseverance. Instead of tuition, it takes 17% of the student’s gross pay for three years. See the New York Time article here.
Industry Schools — Cooperation Between Companies
One of the drawbacks to for-profit training is that the provider is always guessing exactly what jobs employers will want to fill. Employers, however, know exactly what skills they need.
While Microsoft could probably absorb all the graduates from the Microsoft Code Academy there is no reason why a number of companies couldn’t partner to underwrite a coding school. Microsoft, Facebook, Intel, Google, Adobe, etc. could agree among themselves to allocate the annual costs of the school based on the number of graduates each hires as a percentage of the total graduates hired by all of them.
To pay for the training, the students would have two choices:
- Upon graduation a student could accept a job offer from any of the companies sponsoring the school and receive a salary no more than 33% below what regular employees performing similar work are being paid by the same company for the same job. These lower wages would continue for no more than three years, or
- Reject a job offer from a sponsoring company and accept a job from a non-sponsoring company and pay the school 33% of their take-home pay for the same three-year period.
If there was no job offer or if the student didn’t take a job in the programming field within three years after graduation the student would owe the school nothing.
Other Occupations
There is no reason why hospitals couldn’t build medical schools and nursing schools to provide a “free” medical education to doctors and nurses in exchange for a reduced salary at the sponsoring hospital over the first three or four years after graduation.
Key Issue Is To Make The Profit Motive Work For Instead Of Against The Student
If schools can only make money by training people who have the ability to do the work and for jobs that actually exist then that’s what they will do.
If talented people who want to work can get training without living in poverty for the next fifteen or twenty years while they repay crushing student loans, then that’s what they will do.
The result of this system is that
- workers will get trained risk-free and at a reasonable price;
- companies will get a supply of skilled employees for a cost substantially less than the full cost of training them, and
- society will have more trained workers making a decent living instead of untrained workers living on public assistance.
How Would This Happen?
State governments would have to pass legislating authorizing and regulating “contingent fee” schools.
The federal government would have to pass legislation enabling the principal aspects of the system.
Once the legal structure was in place, private companies and potential employers could set up the schools.
The Alternative
Or, we can increase government bureaucracy, appropriate hundreds of billions of dollars, and keep on doing what we’ve been doing, namely, wasting hundreds of billions of dollars on bad training for unqualified students for jobs they’ll never get, all funded by loans they’ll never be able to repay.
Our choice.
– David Grace (www.DavidGraceAuthor.com)
