Last week the Mackinac Center — a think tank that focuses on public policy in Michigan — published a new study: “Workforce Development in Michigan.”
The study, authored by Hope College economics professor, Acton research fellow, and Journal of Markets & Morality associate editor Sarah Estelle, examines the wide variety of skills-training and employment programs in the state. As the Mackinac Center put it in their press release,
The government has been actively involved in job training since the 1960s, with both the federal and state governments launching initiatives aimed to prepare workers for the jobs of tomorrow. The federal government supports several programs by providing grants to states. The state of Michigan also has its own workforce development projects, expanded recently by former Gov. Rick Snyder with further expansions proposed by Gov. Gretchen Whitmer.
But the state does not provide much by way of actual skills training, what most people think of when politicians talk about workforce development. Instead, most of the state’s “workforce development” programs are focused on employment services: career counseling, job search help or soft skills training. Nearly all publicly funded skills-based training take place in public high schools’ career and technical education programs and at community colleges through their occupational training programs.
Estelle surveys the wide variety of both state and private programs, ultimately concluding that Michiganders would be better served if policy-makers had more trust in market forces: employers would be incentivized to raise wages for needed jobs and even to train current and new employees to fill those needs.
Instead, in some cases well-intentioned policies meant to encourage workforce development have instead just encouraged businesses and schools to check the necessary boxes needed to qualify for state aid. Estelle writes,
If it is less costly for a business or industry to convince policymakers to help them overcome the challenge of meeting the skills gap than it is to train workers themselves or pay them sufficiently to invest in their own skills, businesses will pursue political solutions rather than market solutions. This cronyism, though logically coherent, is not good for the state of Michigan and taxpayers. It is clearly beneficial for the businesses who are successful in these efforts. Not only do they benefit because taxpayers end up footing the bill for training their employees, it also would boost these firms’ labor supply, putting downward pressure on the wages they would need to offer to attract workers. While the beneficiaries and benefits are easily identifiable — businesses get the skilled workers they need — the costs are diffuse and often unseen. All of us pay a little more in taxes or forego other services that are genuine public goods that government can provide, such as public infrastructure, policing and the courts.
This may not be the sort of injustice that people get excited to protest, but the unseen, pervasive nature of cronyism like this adds up, in this case to lower wages and wasted tax dollars. That’s something I’d like to see the state of Michigan lead the country in correcting.
More from Acton
Sarah Estelle recently gave a talk for the Acton Lecture Series on the economic ways of loving. You can watch that lecture here:
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