How to solve the skills gap

When I first started reading about JetBlue’s Gateway 7 program, which hopes to train new pilots from scratch, I thought it sounded like a great idea. The airline’s program puts students through simulators and in-house classes, reviews their performance results and provides a road to a cool job. In a labor environment in which a lot of young people are looking for a reliable plan, Gateway 7 could be Teach for America with wings — a low bar but still a rare investment in workers.

Then, I got to the end of the article, where it read, “Prospective pilots would pay for their own training.” Of course Gateway 7 was too good to be true.

Like many companies, airlines can’t make any money unless people work for them —and in this case, candidates must know how to fly planes. But once trained, pilots are free to go work somewhere else. The military gets around this problem by requiring minimum terms from pilots, and airlines have long taken advantage of the publicly funded training by hiring ex-military personnel. But the rise in student-funded post-secondary education has enabled employers of all sorts to push training costs onto workers. The more skilled job applicants are when they hit the market, the less companies have to risk by investing in them.

In a broad sense, employers have an interest in turning worker training into education. Workers as a class, however, are better off getting paid to learn how to use Excel or fly planes or operate other heavy machinery rather than footing the bill themselves. But an individual worker, on the other hand, might be willing to take out education loans if they think it’ll help them qualify for a career. And if enough individuals are willing to pay for their own training, then employers tend to win the contest. The next question for companies is how to ensure that schools are teaching the correct skills so that recruits require the minimum amount of new instruction.

Luckily for employers, students tend to seek out postsecondary education because they’re looking for a career. Higher education administrators at all levels want their graduates to get jobs, and they also want help funding new programs that help their graduates get jobs. When employers say what they’re looking for, smart education administrators are inclined to listen. A new regional training initiative called Tennessee Manufacturers Works (TMW) announced last month brings employers together to define skills they need. Most of the program’s $200,000 funding comes from the metals giant Alcoa, which will be looking to replace a wave of skilled workers soon.

“The urgency for creating new pathways to manufacturing jobs has never been greater,” Ryan Kish of the Alcoa Foundation said. “Tennessee has a strong manufacturing economy, but many jobs remain unfilled for months, signaling a need for better career entry points.” The president of the Tennessee Association of Manufacturers Tim Spires said, “As we work daily with manufacturers across Tennessee, the number one concern we hear from CEOs and plant managers is the lack of availability of a skilled and dedicated workforce.” Matching education and jobs sounds like a win-win, but it’s a much better deal for the employer. Designing curriculum — as Tennessee Manufacturers Works is planning to do — is much cheaper than paying for the training itself.

Employers like the ones quoted above often talk about the skills gap — their difficulty finding workers prepared for the jobs they need to fill. Capitalism provides them with a few simple solutions to this problem: They could raise wages (to attract more and better qualified applicants) or pay for their own training programs. Instead, what they’re looking for is more, better-skilled labor without having to pay for it. Wages in American manufacturing were down 5 percent from 2003 to 2013 according to a report from the National Employment Law Project. Manufacturers can’t ask for more qualified workers and shrink pay at the same time, or at least they can’t do it in good faith.

Bad faith or not, hybrid education-work training programs are a cheap solution. In Kentucky, manufacturers are already ahead of Tennessee. This year the state Kentucky started its first class of Federation for Advanced Manufacturing Education (FAME) students. In the program, students split their time between class at a technical college and on-the-job training at a local manufacturer. After five semesters — and over $10,000 in tuition — students graduate with an associate’s degree in industrial maintenance and are prepared for a factory job if there’s an opening. The student workers get paid, but the program’s minimum wage is only $12 an hour. And government grants pay for the machines for students to practice on. Programs such as FAME, Gateway 7 and TMW all push corporate labor costs onto the state and workers themselves.

Participants, state governments and employers are excited about these new educational paths to employment, but there’s one important voice missing: labor. Unions represent workers who have, as a group, seen their wages decline. “We’re opposed to [Gateway 7],” Captain Jim Bigham, the chairman of the Air Line Pilots Association union at JetBlue told Bloomberg. “We think there are thousands of pilots available that have higher qualifications right now than any pilot coming out of an ab initio program.” Ford’s two Tennessee plants aren’t taking part in FAME because their apprentice program is governed by an agreement with United Auto Workers Local 862. Unions are willing to look like killjoys without an appetite for innovation as long as it helps stop wages sinking.

Whether workers are learning to fly jets or repair machines that make dishwashers, our main question should be who pays. Employers need to put up their fair share, and we need to ensure whatever they’re offering isn’t part of a larger plot to reduce their labor costs at the expense of others. It’s hard to organize people who don’t have jobs yet, but it might be the only hope.