By Robert Lerman, Pamela Loprest, and Daniel Kuehn, from the Urban Institute

This paper was prepared as part of a Concord Coalition project on fiscally responsible economic growth. Generous financial support was provided by Jeff Fox, Chairman and CEO of Harbour Group, St. Louis Missouri.

For a full version of the paper click here.

Long run labor market trends in the American economy pose significant challenges. Growth in real money wages has been slow, with the most rapid gains taking place among workers at the top of the earnings distribution. Labor force participation and employment rates have been falling. Reduced labor force participation and obsolescence of workers’ skills weighs down GDP growth, with predictable negative repercussions for living standards and federal revenue. This paper suggests the need for a major revamping of policies and programs that prepare people for careers and retrain people who must change careers.

The authors focus on three major policy initiatives to maximize worker training to bolster productivity and wages: Improve access to in-demand training; strengthen connections between career and technical education and training and employer needs; and build a robust apprenticeship system that emphasizes learning by doing in a context that involves apprentice contributions to production, and culminates in a respected occupational credential. This new system goes beyond the “academic-only” approach commonly pursued in the US and should match individual interests, aptitudes, and skills to in-demand jobs and make new training investments that are cost effective and valued by employers.