JD Vance has often highlighted the unenviable plight of white working-class young men and at times, the strategies to effectively combat it. He has also correctly identified the fallacies of free trade.
For economists, nations prosper when they specialize in what they are comparatively better at and trade for what they are not. Suppose that there are two goods in the world and one country is better at both. But if it is 2X better at one but 10X better at the other, it should specialize in the latter and trade for the former. This is a basic principle taught in every Economics 101 class. Indeed, it was in the Paul Samuelson textbook that dominated this course nationwide for more than twenty years in the postwar period. Instead of countries he took two individuals: a man who was 2X as skilled at typing but 10X better at lawyering than a woman. He specialized in what he had a comparative advantage in – lawyering -- while she specialized in the area in which she was least inefficient, typing. (After a public pushback by young economists in the 1960s, Samuelson realized that he could no longer use such an offensive example.)
This proposition is true in the aggregate: the total number of jobs will be greater if production specialization proceeds along the lines of comparative advantage. However, a total national gain of one million jobs may reflect a gain of six million jobs in the specialized area but a loss of five million jobs in the less efficient sectors where jobs are shifted abroad. But what happens to the five million workers who lost their jobs? Economic theory suggests that they will simply shift to the sectors that are gaining employment.
Now in a country that has no immigration and simply trades goods and not people, it is true that most of the dislocated would find their way into paid employment. As some workers filter up to the expanding sectors, this frees up slots for the displaced workers. Government training and relocation programs could accelerate this readjustment. But what if H1B visas and other inducements bring in the necessary skilled workforce? Then many more of these five million displaced workers would not find their way into the paid labor force.
Not surprisingly, this creates an environment in which many young men from this displaced cohort are idle and don’t develop the behavioral traits necessary for sustained employment. This is the situation that many employers hiring semi-skilled labor in Amazon distribution centers and similar sites find themselves in. And when lesser-skilled immigrants flood the nation, they will be hired for these jobs because of their superior behavioral traits, not simply the lower wages they might work for.
Vance well understands this situation from his own upbringing. He has talked about generating vocational program among youth to prepare them better for the world of work. Often allowing companies to tailor training to their specific needs is highly successful, as the South Carolina experience illustrates. Apprentice funding, enterprise zone funding, and community college funding all allow South Caroline firms to tailor training to their specific needs.
These company-targeted efforts have limitations so that much of the training must be done around more general skill development initiatives. This would be noncontroversial if these more general programs led to entry into the high-paying trades, like plumbing and electricians. But given the lack of skills among too many high school men, it is using certificate programs to prepare them for work in Amazon distribution center-type jobs.
One important strategy is to expand stackable certificate programs: earn the first that gets you an entry level position; and then a second (and third one) that leads to advancements and earnings growth. In 2021, RAND Corporation in an Ohio study found that the state experienced strong growth in short-term credential programs over the last 15 years, particularly in the healthcare (146%) and manufacturing and engineering technology (171%) fields. In addition, these certificate programs reported more stackable features over time, with more than half being new manufacturing and engineering technology (MET) and IT certificate programs.
For many youth, these short-term certificate programs are the first time they have succeeded in an educational environment. And some eventually go on to gain community college degrees. However, what is key is it puts youth into steady employment. That is, even if you begin at a low-rung, steady employment generates wage growth that enables virtually all to reach at least the lower-middle class. A Princeton study found that, after holding educational levels constant, inflation-adjusted wages increased by 75 percent as the youngest full-time, year-round workers aged by 20 years. And US Census data indicates that in 2016 50 year-old full-time, year-round workers had an average wage 50 percent higher than that of 30-year-old full-time, year-round workers.
What troubles me is that Vance has not focused on expanding these efforts. This certainly means more federal aid to state programs like those in South Carolina and certificate programs like in Ohio. It also means adjusting Pell Grants requirements so that students in approved certificate programs can gain financial aid like those taking credit-bearing courses at community colleges. However, instead of advancing these initiatives, the Trump Administration has just announced plans to eliminate the Job Corps. As studies consistently show, the Job Corps has weak outcomes and is very expensive. But without presenting the alternative government-supported job training, this move seems insensitive and simply another attack on previous liberal initiatives. I hope Vance rises up over the next year to follow his vision on job training and champions the necessary legislation.
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