Minneapolis StarTribune, April 19, 2012


Lori Sturdevant was right to call out the Legislature for failing to pass a bonding bill with significant funding for Minnesota State Colleges and Universities (“Sharp strategy for MnSCU. One catch … ,” April 1. However, she gave a nod of approval to Chancellor Steven Rosenstone’s Workforce Assessment Initiative without adequately investigating his basic premise.

Employers claim that many jobs are going unfilled because the labor pool is unqualified. This thesis remains unproved. Business lobbies are playing Rosenstone like a fiddle. Their disingenuous strategy has little to do with reform or producing well-educated persons. Rather, they want the public sector to pick up the tab for employee training in order to reduce labor costs and maximize profits.

Let us not mince words: Workforce development is corporate welfare.

To be fair, Sturdevant and Rosenstone are not alone in their enthusiasm for workforce development. Business leaders, legislators, state agency commissioners, reporters and editorialists, and even Gov. Mark Dayton have fallen prey to this latest institutional fad. The sociologist Joel Best’s recent book captures this phenomenon: “Flavor of the Month: Why Smart People Fall for Fads.”

How does this bedazzling process work? Every institutional fad needs a good story — a perplexing problem and a compelling solution. What is the problem that Rosenstone seeks to solve? Minnesota’s jobs-skills mismatch. How is he going resolve this predicament? He has made an “all in” bet on workforce development.

Where did MnSCU’s “mismatch” story line come from? Credit David Olson, president of the Minnesota Chamber of Commerce and chairman of the MnSCU Board of Trustees from 2007-10. Olson proselytized the jobs-skills mismatch for the chamber while simultaneously reshaping MnSCU’s educational mission as workforce development.

MnSCU is planning 50-plus “listening sessions” with “Minnesota employers to gain a better understanding of their current and future workforce needs.” Sponsoring this initiative with MnSCU are the Minnesota Department of Employment and Economic Development, and none other than the Minnesota Chamber of Commerce. Does Rosenstone really expect unbiased data from these listening sessions? His workforce-development strategy depends not on dog-and-pony shows, but on reliable evidence of a jobs-skills mismatch.

Economists from Columbia University, the Federal Reserve Bank of New York and New York University devised a sophisticated skills-mismatch index that they used in a 2011 study, “Measuring Mismatch in the U.S. Labor Market.” They published a follow-up paper on March 29. Their conclusions raise doubts about any significant structural or long-term mismatch:

“Based on this mismatch index, we conclude the following: First, the index displays considerable cyclicality, increasing notably in recessions. Second, the index has fallen appreciably during this recovery and is now near its pre-recession level. This pattern suggests that although mismatch rose considerably during the Great Recession, that rise proved temporary.”

In other words, the market has been working out the mismatch. Even during the recession, the problem was, to some extent, an illusion. It was often not a shortage of skills but employers’ inability to find workers at the wages offered. The way to resolve a labor shortage in a free market is for employers to raise wages. If they don’t, workers are free to pursue other opportunities.

The jobs-skills mismatch may be little more than a public-relations ploy by employer associations to get the public sector to pay for apprenticeships and job training that employers once provided. These same business lobbies have spent a small fortune seeking lower taxes, resulting in higher-education cuts that made tuition increases inevitable. Corporations not only want to call the tune for public higher education, they want students and their parents to pay the piper. Back in the day, students became well-informed citizens; today, they become commodities for industry.

These policy decisions about the future of higher education constitute a moral hazard. Economist Paul Krugman defined moral hazard as “any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go badly.” Rosenstone and Olson, on behalf of MnSCU Board of Trustees and the Minnesota Chamber of Commerce, are making a risky gamble on Minnesota’s future. Students, faculty and taxpayers will bear the cost if this wager is lost.