Money Matters

Economics, Banking, Finance, and Supply Chains

Job training alone does not reduce unemployment

Job training: The image is of someone trimming an electrical work that inside an electrical distribution panel

The video below is of a man named Warren Mosler explaining how job training is not enough to reduce unemployment.

He uses the analogy of dogs finding bones to illustrate the idea.

But, for those of you who would rather read, here is how it goes.

The idea behind job training programs

The basic idea is as things shift in society, the types of jobs available will change.

As we transitioned from horses to automobiles, opportunities for people who care for horses became fewer while opportunities for people who cared for automobiles become greater.

The same will happen as we transition from fossil fuels to wind, solar, and nuclear (assume we do transition to more nuclear).

When this occurs, it’s necessary to retrain people for those jobs.

Of course this only works when the economy creates enough jobs, which is where the dogs finding bone analogy becomes useful.

Here is the “dogs finding bones” analogy

You have 100 dogs that you let loose into a large yard in which you’ve buried 95 bones.

The 100 dogs dig around for a while and one by one, they come back with a bone.

However, five dogs come back with no bones.

You identify that as a problem.

These five dogs came back with no bones.

We need a training program to teach these five dogs how to find bones better.

So you do just that.

Bone finding training

I have no idea how you would teach dogs to find bones better, but for sake of having an example to work with lets assume it has to do with better recognizing the smell of bones, having ideas about where bones are mostly likely to be buried in the yard, and techniques for “test digging” to see if you’ve found a bone without spending too much time and energy.

So, you run these five dogs through the training program.

So you rebury the 95 bones in the yard, and release the 100 dogs to each go find a bone.

And not only do the five dogs you trained all find bones, they find bones the fastest and are the first five dogs to return.

You hold up these five dogs as models of success and use them as evidence your bond finding training is working.

I’m thinking you already see the issue here

This time, five different dogs come back without bones.

You identify THIS as a problem and you run these five dogs through the training program.

And therein lies the problem.

Unless you bury 100 bones in the yard, there will always be five dogs who come back without bones. Guaranteed.

You can only solve this problem one way

In the case of the dogs who can’t find bone, there need to be more bones.

In the case of the workers who can’t find jobs, there need to be more jobs.

It’s that simple.

Unless the economy is producing enough jobs, job training merely changes who can’t find a job, it doesn’t reduce unemployment.

So while job training is good and we should do it as appropriate, creating jobs should be a higher priority in order for there to be enough jobs to go around.

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