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Thursday, February 26, 2015

Is the decline in employer support for training worrying?

Timothy Taylor pointed out, at The Conversable Economist, that employer support for employee training has declined, consistently, between 1996 (when 19% of employers reported that they paid for some training, and 13% said they provided formal OJT) and 2008 (11% and 8%).  I linked to that on a listserv (on teaching economics), labeling it the depressing fact of the day.  One of the other people there (Michael Nuwer) raised a valid point: 

According to human capital theory such a decline in on-the-job training makes perfect sense when the rate of job turnover increases. Many of us tell our students to expect numerous employers throughout their careers, which means these employers are less willing to invest in firm specific skill. But this tells us nothing about what might be happening to the
acquisition of general skills. Feeling depressed might be premature.
Quite right.  But are quit rates increasing?  I looked.  The Department of Labor has a data series (JOLTS--Job Openings and Labor Turnover Survey) available online, going back to 2001 (so not a very long time series). As it happens, the percentage of (employed) people who quit their jobs in any month tends to rise during recoveries and booms, and fall during recessions (no surprise there).  So quit rates fell from early 2001 to the end of 2002, and then rose until late 2006--well before the most recent recession began--and peaked at a level well below the January 2001 level (2.6% in 2006, 2.9% in January 2001).

And the quit rate fell, steadily, bottoming out at 1.4% in September 2009.  By December 2014 (the most recent data), the quit rate, at 2.2% was still well below its pre-Great Recession peak.

We can also look at total separations (quits plus layoffs plus other separations-retirements, deaths, for example).  There are obviously more of these that there are of quits, but the pattern is similar--falling from January 2001 (a 4.9% total separation rate) to March 2002 (4.0%), and remaining flat until April 2009 (during that period, quits fell and layoffs increased).  From April 2009, the total separation rate fell to 3.3% in January 2012.  It has since increased to 3.9%--still below its level during the Great Recession.

My take-away from this is that it's not obvious that increased labor mobility is driving the decline in employer support for employee training.  And that the decline in employer support for employee training is, as Taylor suggests, in fact something to be concerned about.


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