Report Finds: Retraining in S&T Yields Higher Wages for Laid off Mature Workers

Layoffs are an expected, yet difficult, aspect of the U.S. economy as companies shift employment needs to reflect changes in demand, technology, competition and trade. During a down economy, the number of workers facing layoffs can be particularly difficult for a region to reabsorb. Research has shown that experienced workers with long tenures in a particular job or sector endure substantial long-term earning losses once they find new work. In other words, the jobs older, more experienced workers take after being laid off typically pay substantially less than their original positions.

Returning to school for even a one-year equivalent at a community college can positively change that, however, if the older worker pursues courses in science, technical and math, according to a recent working paper of the Federal Reserve Bank of Chicago. Louis Jacobson, Robert LaLonde and Daniel Sullivan, the authors of Estimating the Results of Community College Schooling for Displaced Workers, find "courses teaching quantitative or more technically oriented vocational subject matter generate earnings gains that average 14 percent for men and 29 percent for women. By contrast courses teaching non-quantitative or non-technical vocational skills are associated with small or possibly zero earnings gains."

"About one-third of the increase in earnings associated with more technically oriented vocational and academic math and science courses is estimated to be due to increases in wage rates, with the remainder attributable to increased hours of work," the paper states.

The authors caution there are challenges to their model and that further research is needed on the topic. However, the policy and programmatic implications of the findings could be significant, particularly as more of the U.S. workforce ages, as the manufacturing sectors continue to transition jobs to low-wage countries, and as public funds to support training programs become more scarce. For example, the findings suggest job training and retraining programs targeted toward schooling mid- and late-career workers in specific courses in the sciences, math or technical fields would have greater social and economic benefits than subsidizing regular community college or undergraduate course work of laid off workers.

Estimating the Results of Community College Schooling for Displace Workers is available at: http://netec.mcc.ac.uk/WoPEc/data/Papers/fipfedhwpwp-02-31.html