Ottawa -- In its dubious philosophical squabble with the federal government, Ontario has - confidently, defiantly - chosen job training ahead of tax cuts to help the province through difficult times. From Premier Dalton McGuinty's perspective, (Liberal) job training programs affirm a more heroic kind of government than (Conservative) tax cuts.
In March, his government committed $1.5-billion for new job training programs, promising in its budget papers that this expenditure would ensure that "all Ontarians have the skills they need to succeed," that it would "get more Ontarians into well-paying jobs."
Well, good luck, Mr. McGuinty. You'll need it on this file. It's easy for governments to spend $1.5-billion. It's hard to document results. Now, perhaps, it's getting harder. From Europe comes a sobering assessment that Switzerland's aggressive job training programs - far more heroic than Ontario's - have zero impact on Switzerland's unemployment rate.
Published earlier this year in the Royal Economic Society's Economic Journal, researchers Rafael Lalive, Jan van Ours and Josef Zweimuller studied a number of Switzerland's job training programs to determine which, if any, was working. Aside from a single program, which was not government run, they concluded that none of these programs was working in the slightest, that unemployed workers who got training remained unemployed for the same length of time as unemployed workers who did not.
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With unemployment levels comparable to North America, Switzerland has always spent a remarkable amount of money (more than 4 per cent of GDP) on the support and training of unemployed workers. Beginning in 1997, though, the country introduced "active labour market policies," a phrase that signalled an end to the passive delivery of unemployment cheques.
Each canton was required to fund a minimum number of mandatory job retraining courses, which run from weeks (simple lessons in job hunting, lectures on self-esteem) to months (intensive computer courses, service industry courses). Once registered, workers who go AWOL for a day or two can forfeit as much as a month's unemployment benefits.
In the only Swiss program that worked, the country undertook only to subsidize the wages of people who found jobs for themselves at salary levels below the officially designated minimum wage. (The Swiss "minimum wage" stipulates that employers cannot pay anyone less than 67 per cent of a worker's previous wage.) With government subsidies, these lower-wage jobs paid workers as much as 80 per cent or more of a worker's previous wage.
The three economists concluded that the only Swiss program that reduced the customary length of unemployment was the wage-subsidy program. Ironically, the subsidies cost much less than conventional job retraining programs; the economists describe the subsidy cost as relatively minuscule.
Judging by the Swiss example, Ontario might be well advised to take its $1.5-billion, buy 75,000 Chevy Impalas from GM's survivor plant in Oshawa, and give them to unemployed, low-income workers who don't own a car. Alternatively, it could buy and give 150,000 Chevy Aveos. (These numbers assume that the government could negotiate a "superfleet" price of $20,000 a car for the Impalas, $10,000 for the Aveos.) Why? Researchers at the Brookings Institution concluded - after years of detailed study in major cities - that the best way to help unemployed, low-income people get work was to give them cars. Based in Washington, D.C., Brookings is widely regarded as one of the most influential public policy think tanks in the world.
Why cars? In 2006, Margy Waller, a Brookings Institution researcher, described the connection this way: "Even in places that have really good [public] transit, research evidence shows that people with cars have much better employment opportunities. People with cars work more hours, earn more income and are more apt to be employed. If advocates for the poor really want to help low-income families, they'll [enable] people of meagre financial means to purchase automobiles." The institute's research showed that twice as many welfare recipients with cars were working than those without cars, and 25 per cent more low-income families with cars were working than those without cars.
Brookings described the lack of a car as one of the most prevalent barriers to employment. "Given the strong connection between cars and employment outcomes," Brookings said, "auto ownership programs may be one of the more promising [policy] options."
The Progressive Policy Institute, a Washington think tank affiliated with the Democratic Party, endorsed the Brookings case for cars: "The most important response to the policy challenge of job access ... is the expanded use of cars by low-income workers."
Ontario won't spend $1.5-billion on Impalas, and shouldn't. The Impala Career Assistance Program is fantasy. Yet the province proposes to squander a comparable fortune on a comparable fantasy - the illusion that Mr. McGuinty can provide "all Ontarians with the skills they need to succeed."
The question is: Who's creating the jobs that require these skills? Before this particular episode ends, Mr. McGuinty will be cutting taxes - heroically.
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