When teaching jobless workers new skills is no panacea

I imagine nothing can compare with the deadening feeling of losing your job. For workers in their late 50s, being laid off can even cut life expectancy.

Many of those made redundant cling, however, to the hope that they will be able to acquire new skills. One of the most powerful moments in Amy Goldstein's book describes when that hope itself starts to evaporate, three years after the 2008 closure of a General Motors factory in the Wisconsin town has forced 9,000 people in the area out of work.

At that point, Mr Bob Borremans, one of this tale's quiet heroes, realises that, "with good intentions but wrong expectations", the job centre he runs "has sent people into what he is starting to regard as a double whammy. They lost their jobs. They went to school to equip themselves with new skills, and they still can't find jobs".

Janesville, recently judged Financial Times and McKinsey Business Book of the Year, offers many unexpected and nuanced lessons for business, political and community leaders. It vividly illustrates the unintended consequences of decisions taken in corporate boardrooms and political back rooms. It puts human faces on the chilly data that usually illustrate recessions. It sends a deeply reported reminder to global companies that they have local responsibilities.

Professor Herminia Ibarra of London Business School, one of the award judges, says she hopes chapters will be used to teach would-be executives how the answers to difficult business questions are often more complicated than they first appear.

The question of how to soften the blow of recession is one of the most complex, and retraining has traditionally been the only answer on which all parties can agree. At the time of the GM closure, Janesville-born Paul Ryan, now Republican Speaker of the US House of Representatives, and then president Barack Obama were unlikely allies as cheerleaders for "reskilling". But the local people charged with channelling often generous public subsidies to those who need new skills knew "a grittier, ground-level truth", writes Goldstein: "Retraining laid-off factory workers is not easy."

Dr Sharon Kennedy, who led the programme at Janesville's Blackhawk Technical College, laid out some of the obstacles in her own 2013 account. She wrote how Blackhawk was "unprepared for the unpreparedness" of new students to use computers and in many cases had to provide hands-on assistance to help them navigate the maze of applications for training.

Goldstein ran what she described to me as "microcosmic" research into the fate of Janesville's workers and confirmed an even more worrying truth. The obvious political solution of retraining what US welfare jargon calls "dislocated workers" was ineffective. In the county around Janesville, unemployed locals who went back to school were less likely to have a job after retraining than those who did not. If they did find a job, they earned less than those who had not retrained.

Many Janesville workers signed up to study electric power distribution, betting that technicians at a nearby energy company would retire. By the time they were finishing their training, the recession had deepened, and the energy jobs were drying up. Instead of retiring, the electricity workers were clinging on to roles that provided dependable income.

For instance, many Janesville workers signed up to study electric power distribution, betting that technicians at a nearby energy company would retire. By the time they were finishing their training, the recession had deepened, and the energy jobs were drying up. Instead of retiring, the electricity workers were clinging on to roles that provided dependable income.

This was one place, at one almost unprecedentedly difficult moment in economic history, when the cluster effect - according to which interconnected businesses spring up and reinforce each other's prosperity - switched violently into reverse gear.

But if you substitute robots for recession, the wider relevance of the Wisconsin microcosm becomes clear. The assumption that artificial intelligence will spawn new, as yet unimagined, jobs could prove too optimistic. In which case, watch out for the Janesville effect on training programmes.

Alternatives are scarce. Overarching policies, such as universal basic income, look difficult to implement at scale. They divide rather than unite politicians. The drive for better basic education, which might have given Janesville's workers the confidence and computer skills to change careers sooner, is a vast political challenge.

On-the-job training has a better record of success. But resilience is hard to teach, and even harder to imbue in places with less ingrained community spirit than Janesville had and has.

It seems likely politicians will continue to fund teaching of new skills, then, even though the presumption that it is always "better than nothing" does not necessarily hold. As another of the book award judges puts it, companies and governments "are going to keep spending money on retraining, because otherwise you can only say 'I'm sorry'".

FINANCIAL TIMES

A version of this article appeared in the print edition of The Straits Times on November 15, 2017, with the headline 'When teaching jobless workers new skills is no panacea'. Print Edition | Subscribe