Benefits of job retraining not always clear
When Sallie Malmstrom lost her job as an industrial designer in 2009, she instantly knew her next step would be to seek more training.
Malmstrom, 52, wanted to increase her knowledge of project management and technical writing — and receive formal acknowledgement of her skills.
"I just needed to have the certification, because it seemed that people are more interested in having a piece of paper to look at," she said.
Malmstrom applied for re-training funds at her local workforce center in Eden Prairie and quickly got the green light. More than a year after finishing school, she found a temporary gig. She doubts the training landed her the work. But once on the job, her new skills helped her successfully lead a big project on a tight deadline.
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"I would not have had the comfort level or felt the legitimacy of what I was doing without that training, without knowing the steps and putting a huge project like that together," she said. "It really did build a good foundation where I can reinvent myself."
When Malmstrom's temporary position turns into a permanent job in May, she'll earn more than $15,000 more than she did before her last company laid her off. That's roughly triple the return on her $6,000 in training.
That's an ideal outcome for retraining, but not necessarily a common one. Politicians and economists alike say that too many jobless workers lack the skills that are in demand. As a result, they've focused a lot of attention on worker retraining as a key tool for putting the unemployed back to work.
Some question the effectiveness of retraining programs, which don't always help land workers jobs. After David Rogde of Bloomington lost his job as computer operator in 2008, he received funds from the state's Dislocated Worker program to retrain as a paralegal.
"It was four of the best months of the 21-month time of being unemployed," he said.
Those four months of school cost $9,000. The state footed nearly half the bill. But Rogde, 58, never found a job as a paralegal.
He returned to work, but in his previous occupation. That lead him to conclude taxpayer dollars were wasted on his training.
"MORE RELIGION THAN SCIENCE"
A big question is which of the two workers' situations is more typical.
That's tough to nail down, said Ken Troske, an economist at the University of Kentucky. He said there aren't many thorough studies about training programs. But that doesn't stop people from drawing conclusions.
"What people believe about what works in workforce development is largely more religion than science," Troske said. "It's like 'Oh, well, I know this must be working.' And then they come up with these statistics. And then regardless of what the statistics say, they say, "Oh, well this is why it shows us it's working.' "
A few years ago, the U.S. Department of Labor commissioned Troske and others to take an in-depth look at the effectiveness of a couple programs that offer retraining.
To some extent, their findings suggest both Sallie Malmstrom's and David Rogde's experiences were typical.
Women enjoyed much greater benefits from the workforce programs than men did, whether they were using programs for job counseling services or getting funds to pursue training. Troske is not sure why women's earnings and employment showed steeper gains, but said it could be that many of the women were single mothers with a greater motivation to succeed.
The researchers noted another pronounced effect of the workforce programs. The state's Dislocated Worker program, which aims to help people who have lost their jobs to layoffs, had a much lower success rate than the Adult Program, which serves poor people.
"For participants in the Adult Program, the benefits they were provided seemed to exceed the direct cost to taxpayers of providing the program," Troske said.
Not many states study their workforce programs' performance. But Minnesota has.
Troske said a report by Minnesota's Office of the Legislative Auditor is the most sophisticated analysis he's seen a state produce. That study reached similar conclusions to Troske's report. Women do better than men. And the Adult program yields better results.
But Bonnie Elsey, the director of workforce development in Minnesota, disagrees. She said there's a clear reason the low-income people in the Adult program appear to do better than those in the Dislocated Worker program. Elsey said the wages and skills of people enrolled in the Adult Program are low to begin with.
"Any investment in them is going to help move their salaries up," she said.
On the other hand, she said a 50 year-old dislocated worker who's been laid off after decades of doing the same job probably won't see higher pay at a new job, even with additional training.
"A new company will say, 'Well this is our pay range. You might get back there someday but we don't start people out there.' Very seldom are they going to get higher than what their previous wage was," she explained.
Elsey said that doesn't mean the training was for naught, even if it's hard to prove that people benefit from it.
But the state does want to develop better ways to measure how training helps workers. Minnesota is launching a pilot program to assess the return on investment that the state gets for its workforce programs.
Malmstrom thinks the state saw a great return on her training, and she looks forward to showing her gratitude.
"I'm hoping to give back in taxes," she said. "And I would like to be able to mentor others."
But there's a sad postscript to her story. Even though Malmstrom's training will help her get a salary boost next year, her 18 months of unemployment put her family in the hole financially. The bank has foreclosed on their home.
