Foon Rhee

Foon Rhee: Retraining may not be the secret to restore American Dream

If Charles Dickens were still with us, he might call it a tale of two plants.

The Siemens rail manufacturing plant is bustling. It employs 800 and just won a $225 million contract to build high-tech locomotives. About six miles away in south Sacramento, the former Campbell Soup Co. plant, where 700 people lost their jobs last year, is being emptied of equipment and turned into a business park.

While making very different products, both plants offered relatively high-paying blue-collar jobs, which are increasingly rare.

That got me wondering: Could a former employee at Campbell’s get a job at Siemens? Can a worker really be retrained to move from 20th-century production to 21st-century advanced manufacturing?

The answers are crucial for America’s future. Retraining has bipartisan support, is funded with billions of tax dollars – and is supposed to keep the American Dream alive for workers laid off during the Great Recession. Widespread success of training programs is central to President Barack Obama’s push to rebuild the middle class.

I’m skeptical. Even if workers do everything they’re told, this may be more wishful thinking than reality.

Laid-off workers face all sorts of obstacles. Many older ones have a tough time learning new skills. Even if they do, the right jobs have to be available where they live. When newly trained workers go up against experienced employees, they tend to lose out. And it’s awfully difficult to predict which jobs will be in demand.

One displaced Campbell’s worker, Adrian White, ran smack into that last barrier. Laid off in February 2013, he started training as a pharmacy technician three months later and received his state license last month. He liked the idea of helping people and figured that Obamacare would boost the medical job market.

It turns out, however, that few full-time pharmacy tech jobs are available – at least not in Sacramento or in San Diego, where he eventually hopes to move to be closer to his ailing mother.

He and many other former workers at Campbell’s – where some jobs paid $20 an hour or more – also hit an unforeseen hurdle. They were counting on unemployment checks during their training, but partisan gridlock in Congress cut off long-term benefits in late December, several months sooner than expected.

So White, 47, can’t afford to hold out too much longer for work in his chosen new field. “I’m trying to get anything right now,” he told me.

Glenn Spencer, 48, has been luckier. After losing his Campbell’s job, he enrolled in heating and air conditioning classes. He graduated in December and put out his résumé in February.

He started a new job March 31, but not in his new field. While he’s making significantly less at the Nestlé water bottling plant in Sacramento than he was at Campbell’s, he’s happy to be back in food production. “That’s where my heart is,” he told me.

No displaced Campbell’s worker is known to have hired on at the Siemens plant. While about 60 percent of the jobs there could be considered “blue collar” – paying $12 to $30 an hour, depending on experience and skill level – they all require some additional training. Especially for more specialized positions, Siemens does its own training; for instance, it sent seven welders to Germany for months of hands-on instruction.

How effective are these retraining programs? There are no conclusive studies; the most complete analysis, done in 2008 before the recession, found that retrained workers did not have higher employment or earnings than those who didn’t get training. New research concludes that only 11 percent of those without a job for more than six months ever get back to steady full-time work.

With the local economy improving, retrained workers are having more success finding work – 63 percent from July 2012 through June 2013, up from 47.5 percent in 2009-10. The average six-month pay in their new jobs also rose, to $18,761 from $17,704, according to the Sacramento Employment and Training Agency.

Statewide, nearly 35,000 laid-off employees received training in 2012-13, and 69.5 percent got jobs, up from 54 percent in 2009-10, according to the California Workforce Investment Board. The average six-month pay in their new jobs also rose, to $17,948 from $17,010. It cost taxpayers $6,639 for each retrained worker who found a new job.

The improving statistics are encouraging, but for the amount of money being spent, shouldn’t the numbers be even better? They equate to an unemployment rate of 30 percent or 40 percent among retrained workers. If the overall jobless rate were that high, we’d be in a depression and the president and Congress would be in deep trouble.

SETA spokeswoman Terri Carpenter says it was difficult to place laid-off workers when companies were still not hiring coming out of the recession. The agency is having more success, she says, with a new “learn and earn” program in which workers get on-the-job training and employers get reimbursed for as much as 90 percent of a worker’s wages for as long as six months.

The state Employment Development Department says that it is meeting or exceeding federal goals, that many laid-off employees need significant help before they are ready to be hired and that some of the retrained workers who don’t land jobs may be in other programs.

After a March 2012 report by the state auditor slammed the workforce board for not having a strategic blueprint, the board launched a five-year plan that took effect last July. It takes a regional approach, focuses on the quality of training programs and affirms California’s commitment to a “retraining economy.”

The state’s community college system, which is just now digging out from the budget crunch, should play a crucial role. It is targeting the most promising sectors in each of 15 regional economies in California and is working more closely with businesses on what’s taught. This approach sounds promising and has worked in other states.

But community colleges don’t always have enough slots for specialized training, and they have to compete with nonprofit training centers and for-profit technical institutes for students. The Sacramento training agency’s list of approved providers includes private schools that offer classes to become an automotive technician, baker, computer programmer, early childhood teacher, electrician, life coach, substance abuse counselor and many other careers.

These courses can be lucrative for private operators. The courses generally cost a few thousand dollars; some top $10,000 or more. Of the $1.3 million SETA spent on training in 2012-13, 98 percent went to private, for-profit schools. But a new requirement that training providers have to place at least 70 percent of their students in jobs is expected to substantially cut the approved list.

Typically, workers can get as much as $5,000 for training. Through a special state retraining grant, displaced Campbell’s employees could tap as much as $10,000.

Antonio Garcia Davila, 41, who worked at Campbell’s for nearly five years, wanted to take an eight-month automotive repair course. But when his jobless benefits were cut off, he picked truck driver training because it took only one month. Soon after finishing the class and getting his commercial driver’s license, he saw a listing on Craigslist and got a job driving a concrete truck.

It’s not what Davila expected to be doing, and his hours depend on good weather for construction, but he’s making nearly as much as he did at Campbell’s. He thinks it’s a stable company, and he’ll have a job. But as he and many other former Campbell’s workers found out, “You never know what’s going to happen tomorrow.”

In our 21st century economy, workers are more likely to move from job to job, company to company. If we’re relying on retraining to guarantee success, that is no sure bet.