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During times of crisis, the most effective leaders are those who can build solidarity by educating the public about its own interests. Sadly, in the case of COVID-19, the leaders of the world's two largest economies have gone in the opposite direction, all but ensuring that the crisis will deepen.




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Why Matter Matters: How Technology Characteristics Shape the Strategic Framing of Technologies

The authors investigate how the executives of the two largest research institutes for photovoltaic technologies — the National Renewable Energy Laboratory (NREL) in Golden, USA and the Fraunhofer Institute for Solar Energy Systems (Fraunhofer ISE) in Freiburg, Germany — have made use of public framing to secure funding and shape the technological development of solar photovoltaic (PV) technologies. The article shows that the executives used four framing dimensions (potential, prospect, performance, and progress) and three framing tactics (conclusion, conditioning, and concession), and that the choice of dimensions and tactics is tightly coupled to the characteristics of the specific technologies pursued by the research institutes.




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Expanding Apprenticeship Opportunities in the United States


Reducing inequality and expanding opportunity are central challenges increasingly acknowledged by leaders across the political spectrum. Policymakers generally agree that one key solution is to prepare young people and adults with the skills to earn a good income. Unlike other advanced countries, however, reform proposals in the United States have typically included little or nothing about apprenticeship—a highly cost-effective mechanism for developing workplace skills and for reducing youth unemployment. However, interest in apprenticeship models is building in the United States, partly because of the recent successes of Britain and South Carolina in stimulating major expansions of apprenticeship training. A robust apprenticeship system is especially attractive because of its potential to reduce youth unemployment, improve the transition from school to career, upgrade skills, raise wages of young adults, strengthen a young worker’s identity, increase U.S. productivity, achieve positive returns for employers and workers, and use limited federal resources more effectively.

Apprenticeship prepares workers to master occupational skills and achieve career success. Under apprenticeship programs, individuals undertake productive work for their employer, earn a salary, receive training primarily through supervised work‐ based learning, and take academic instruction that is related to the apprenticeship occupation. The programs generally last from two to four years. Apprenticeship helps workers to master not only relevant occupational skills, but also other work‐related skills, including communication, problem solving, allocation of resources, and dealing with supervisors and a diverse set of coworkers. The course work is generally equivalent to at least one year of community college. Completing apprenticeship training yields a recognized and valued credential attesting to mastery of skill required in the relevant occupation. Unlike the normal part-time jobs held by high school and college students, apprenticeship integrates what young people learn on the job and in the classroom. Box 7-1 describes a successful youth apprenticeship program in Georgia. (See the PDF for Box 7-1).

In some ways, apprenticeship offers an alternative to the “academic-only” college focus of U.S. policymakers. Increasingly, placing all of our career-preparation eggs in one basket is leaving young adults, especially minority young men, well behind. Among young adults ages twenty-five to thirty-four in 2013, 49 percent of all women and 37 percent of African American women had earned at least an Associate degree; for men, the comparable figures were 40 percent and 28 percent, respectively. Furthermore, in 2011–12, nearly two African American women earned a bachelor’s degree for every African American male who earned one (National Center for Education Statistics 2013). Despite the well-documented high average returns to college, variations in interests, capacities, and learning styles suggest many young people would benefit far more from alternative pathways to rewarding careers than they do from academic-only pathways. 

Apprenticeship can narrow the postsecondary achievement gaps in both gender and race. Having learning take place mostly on the job, making the tasks and classroom work highly relevant to their careers, and providing participants with wages while they learn are especially beneficial to men, particularly minority men. Apprenticeship can give minorities increased confidence that their personal efforts and investment in skill development will pay off, giving graduates a genuine sense of occupational identity and occupational pride. 

Additionally, apprenticeship is a useful tool for enhancing youth development. Young people work with natural adult mentors who offer guidance but allow youth to make their own mistakes (Halpern 2009). Youth see themselves judged by the established standards of a discipline, including deadlines and the genuine constraints and unexpected difficulties that arise in the profession. Supervisors provide the close monitoring and frequent feedback that helps apprentices keep their focus on performing well at the work site and in the classroom. 

Furthermore, apprenticeship is distinctive in enhancing both the worker supply side and the employer demand side of the labor market. On the supply side, the financial gains to apprenticeship are strikingly high. U.S. studies indicate that apprentices do not have to sacrifice earnings during their education and training and that their long-term earnings benefits exceed the gains they would have accumulated after graduating from community college (Hollenbeck 2008). The latest reports from the state of Washington show that the gains in earnings from various education and training programs far surpass the gains from all other alternatives (Workforce Training and Education Coordinating Board 2014). A broad study of apprenticeship in ten states also documents large and statistically significant earnings gains from participating in apprenticeship programs (Reed et al. 2012). 

On the demand side, employers can feel comfortable upgrading their jobs knowing that their apprenticeship programs will ensure an adequate supply of well-trained workers. High levels of apprenticeship activity in Australia, Canada, and Britain demonstrate that even companies in labor markets with few restrictions on hiring, firing, and wages are willing to invest in apprenticeship training. While no rigorous evidence is available about apprenticeship’s costs and benefits to U.S. employers, research in other countries indicates that employers gain financially from their apprenticeship investments (Lerman 2014). 

In general, firms reap several advantages from their apprenticeship investments. They save significant sums in recruitment and training costs, in reduced errors in placing employees, in excessive costs when the demand for skilled workers cannot be quickly filled, and in all employees being well versed with company procedures. One benefit to firms that is rarely captured in studies is the positive impact of apprenticeship on innovation. Well-trained workers are more likely to understand the complexities of a firm’s production processes and therefore to identify and implement technological improvements, especially incremental innovations to improve existing products and processes. A study of German establishments documents this connection and finds a clear relationship between the extent of in-company training and subsequent innovation (Bauernschuster, Falck, and Heblich 2009). In the United States, evidence from surveys of more than 900 employers indicates that the overwhelming majority of them believe their programs are valuable and involve net gains (Lerman, Eyster, and Chambers 2009). Nearly all sponsors reported that apprenticeship programs help them meet their skill demands—87 percent reported that they would strongly recommend registered apprenticeship programs, and another 11 percent recommended apprenticeship programs with some reservations. Other benefits of apprenticeship include reliably documenting appropriate skills, raising worker productivity, increasing worker morale, and reducing safety problems.

While apprenticeship offers a productivity-enhancing approach to reducing inequality and expanding opportunity, activity in the United States has declined in recent years to levels about one-tenth of those in Australia, Canada, and Britain. Some believe the problems include inadequate information and familiarity with apprenticeship, an inadequate infrastructure, and expectations that sufficient skills will emerge from community college programs. Others see the main problem as an unwillingness of U.S. companies to invest, no matter how favorable government subsidies and marketing policies are. In considering these explanations, we should remember that even in countries with robust apprenticeship systems, only a minority of firms actually hires apprentices. Since the number of apprenticeship applicants already far exceeds the number of apprenticeship slots, the main problem today is to increase the number of apprenticeship openings that employers offer. Counseling young people about potential apprenticeship opportunities is a sensible complementary strategy to working with the companies, but encouraging interest in apprenticeship could be counterproductive without a major increase in apprenticeship slots. 

Developing a more robust support system for apprenticeship programs requires action at various levels of government. This proposal consists of a series of targeted initiatives that rely on both state and federal support. At the state level, governments could develop marketing campaigns to persuade employers to create apprenticeship programs, and to build on existing youth apprenticeship programs. At the federal level, the government could provide federal subsidies to encourage take-up of existing vouchers for apprenticeship programs; designate occupational standards for apprenticeship through a joint Office of Apprenticeship (OA)–Department of Commerce (Commerce) team; and develop an infrastructure of information, peer support, and research within the Departments of Commerce and Labor.

Downloads

Authors

  • Robert Lerman
Publication: The Hamilton Project
     
 
 




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Should the US follow the UK to a Universal Credit?


British debates about welfare reform have often been influenced by American ideas. The Clinton-era welfare reforms were echoed in some of Tony Blair’s alterations to British benefits. Gordon Brown, as Chancellor, introduced a new Working Tax Credit as a direct result of studying the Earned Income Tax Credit. Brown particularly liked the political advantages of a ‘tax cut for hard-working families’, as opposed to a ‘benefit handout to welfare families’.

But now the transatlantic traffic in ideas on welfare is going the other way. The U.K.’s introduction of a single, unified system of transfer payments – the Universal Credit – is getting quite a bit of attention in the wonkier regions of D.C. politics. Paul Ryan, at a Brookings summit on social mobility, mentioned the Universal Credit (UC) as a possible inspiration for a new round of welfare reform. (Ryan is giving a speech at AEI in a couple of weeks: we’re likely to hear more about his thinking then.) When the architect of the UC, Iain Duncan Smith, visited D.C. recently, he held a series of meetings with leading Republicans to discuss his reforms.

The main attractions of the Universal Credit are fourfold:

  1. Simplicity. By unifying five cash benefits and an ‘in kind’ benefit (Housing Benefit) into a single, monthly payment, the complexity of the system from the point of view of the recipient will be greatly reduced.

  2. Cost control. Housing Benefit is paid directly to the landlord, which reduces the tenant’s incentive to control costs.  Add that to the crazily overheated U.K. housing market, and should come as no surprise that Housing Benefit has become a major strain on the system, quintupling in cost in real terms over the last two decades to hit £24 billion a year (c. $41bn), to become the second-biggest element of the U.K.’s system, after pensions.  By including an allowance for housing in the single cash payment in UC, the recipient will be incentivized to control their own housing costs.
     
  3. Stronger work incentives. The UC has a flatter ‘taper’ than existing benefits, meaning that cash payments are reduced more slowly as earnings rise. In particular, the UC will allow benefit recipients to work part-time (less than 16 hours a week), and still keep claiming. On the downside, incentives for second earners in two-adult families will be reduced. 

  4. Tighter and more targeted work requirements. The UC will contain stronger requirements to seek work than existing benefits, and importantly, has a ‘sliding scale’ of requirements, depending on the position of the recipient. For example, parents with children under the age of 1 will be exempt from work requirements; those with children aged between  1 and 5 will be obliged to attend for interviews with a case worker to prepare for a return to work; those with children at school will be required to ‘actively seek work’.

Sounds pretty good, doesn't it? And in fact it is, on paper at least. In practice the introduction of UC has been marked with huge overspend and delay on the required new IT system. The whole exercise has also been made much harder by cuts in many of the relevant cash benefits, as well as the introduction of a ‘household cap’ on total welfare receipts. The Universal Credit as an idea has a lot of support. As so often, it has been putting the idea a reality that has been difficult.

What—if anything—can the U.S. take from the UC? Short answer: not much. 

Many of the problems the UC addresses do not really apply in the U.S. Work incentives are already pretty strong in the U.S., thanks to the relative generosity of the EITC, and the relative meanness of out-of-work welfare supports. Also, there are already much stronger work requirements in the U.S. system. Some want to go further, and add work requirements to the receipt of food stamps, for example. But this would not require a major overhaul.  As Melissa Boteach and her colleagues at the Center for American Progress write,“the primary problem that the Universal Credit is supposed to address in the United Kingdom—the lack of incentive for jobless workers to enter the labor force—is far less of an issue in the United States”.

The UC also further centralizes an already highly centralized system, by getting rid of Housing Benefit, which is currently administered by Local Authorities. The U.S. system is much less centralized, with states and cities having a high degree of control over the way TANF and SNAP are administered. It is hard to see how anything like a UC could work in the U.S. at anything higher than State level. A Wisconsin Universal Credit makes sense in a way that a U.S. Universal Credit does not.  But if shifting towards block grants to states is really what this is about (see Marco Rubio’s ‘flex fund’ idea),that’s a whole different debate.

A final point. Simplicity and ease of use for the recipient is a key goal of the UC, and a worthy one. The stress and difficulties faced by low-income families just in applying for assistance is unacceptable in the 21st century. But it is not clear that the whole system has to be upended to achieve this goal. Technology ought to allow a single access point to the system, with the complexity out of sight of the user. 

In the U.K. the Universal Credit has a strong rationale, despite the implementation challenges. In the U.S., it is a solution in search of a problem. 

Publication: Real Clear Markets
Image Source: © Jessica Rinaldi / Reuters
     
 
 




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