Employers Should Pay To Train Employees

 Businesses often complain about a lack of workers with the right skills. They want people who can do very specific stuff, and it seems those people are not in abundance.

People go to college with one of the main goals being increased employability. People feel it would be hard to get a good job, so they go to college to make it easier. They believe that attending college will teach them the valuable skills that employers are saying they are looking for.

But, as so many college graduates are finding out, a college degree is not even enough. Four years of hard work and lots of student debt aren't even enough to always get an entry-level job.

We have an obvious mismatch. Employers want more skilled candidates, ostensibly because they have good jobs to offer them. People generally, but especially college graduates, not only want good jobs, but have proven that they are willing to go to great personal lengths to become job-ready. They are willing to do what it takes to prepare for the job. But all the preparation people believe they need to be completing isn't satisfying employers.

Something needs to change. There needs to be a new solution.

Employers need to be providing the skills training that they want for their employees. And they need to hire people who are not yet fully qualified and actually train them to have the skills they will need for the job. They need to invest in their employees. They need to pay for the outcome they want.

Unfortunately, many, if not most, businesses simply don't want to pay to train employees. They want to hire people who already have the skills they desire. But that makes them free loaders. It leads to a free rider problem. Enough free riders and the whole system fails to function.

If you are a single business in a massive economy, it can make logical sense for you to want to hire only employees that have received their training elsewhere and who can bring their skills to your job on their first day of hire. It is faster, because the person can get to work almost immediately, and it is cheaper, because you are not paying to train them.

But inherent in this thinking is the understanding that the employee will be receiving the training from someone else. Someone else will pay to train that employee. And then you will benefit from the skills that other company paid for. You want other people to pay for stuff you want. That is a free rider problem. You don't bear the costs for the benefits you receive.

When one or a small number of businesses operate this way, it can be annoying. It is selfish and unfair. It is unreasonable. But it could actually work. They could get away with it.

But the problem is that almost all companies seem to be operating this way. Nobody wants to pay for training people. Everyone wants to be a free rider, and when that happens, there is nobody left to pay for the stuff other people want. Everyone is a leech, and there are no more living bodies left to feed on. The system fails. And the system seems to have failed.

Don't believe me that it is already a really bad problem? Go on any job board website and look up job postings with keywords like "entry level". These should be jobs for people who have never had a job before. If they were for people who have had jobs before, they should be called intermediate level. These entry level jobs will just about always include a requirement for "2-5 years of experience".

That is absolutely ridiculous.

How is someone supposed to have 2-5 years of experience in doing something when they are applying to a position which should be someone's first in the industry? That is an oxymoron.

What the job poster really means, though, is that the job pays like an entry level job. They are cheap and they don't want to pay people what they are worth. They want to pay an insultingly low wage. They want to exploit someone. But they want to pay that low wage to someone with excellent skills who can be very productive for them and make them lots of profit.

Every employer seems to operate this way. And if everyone requires several years of previous experience in order to get their lowest rung jobs, where are people supposed to get real entry level experience? Who is hiring people who don't yet have the desirable skills employers want?

Well, when the free rider problem get to epidemic levels, as it has, then the answer is nobody. Everybody is hoping someone else will pay for it, but nobody is left to pay for it. And that is leaving employers with too few qualified candidates, and too many job seekers unable to get the jobs they want. It is bad for everybody.

Employers are hyper focused on the short term benefits of getting something for nothing, but they don't seem to see the longer term problem of drastically reducing the size of the pool of candidates with in-demand skills. This focus on the short term is due to greed.

One solution I have heard of is actually being used in France. In France, the government added a training tax to businesses. I believe it is something like 1% of a worker's salary. That tax will be taken from the business in some form no matter what. That is money that will be spent. That money can either be taken by the government in the form of a tax, or the company can use that same money to train employees. If the company trains employees with that money, then they don't have to pay the tax.

Businesses will almost always choose to use the money to train people, because they want to get something as opposed to nothing for their money. And since they are already spending the money anyways, they can hire people with fewer skills and pay to train up those skills. Everyone wins under this scenario. People can get jobs that they are not yet qualified for, but which they would be great for with the right on-the-job training. Companies can get the skilled workers they are always griping about. And the free rider problem goes away.

One thing that makes it hard for a company to be a training contributor and stop being a free rider is the understanding that they would eventually be paying the training costs for skills another company will benefit from. They could hire some unskilled person, pay to train them up, and then that employee could leave for another company, leveraging those skills they just learned.

But having a training tax ensures that everyone has to pay the costs of training. If everyone is paying, then nobody feels ripped off or taken advantage of. It's fair. Everyone is doing it. And the overall result is that the qualified candidate pool grows. Everyone involved in the economy gets more of the thing they are after.

I believe that people who are willing to learn and work hard should have zero troubles finding a job. They should be in constant demand because they are fresh clay, ready to be sculpted into the perfect person for any job. But those people are struggling hard to find any jobs that aren't low-wage retail and service sector jobs which provide no skills.

I believe that the only way to really get enough people hired into good career-type jobs with a future and a plan towards a good salary is to implement a training tax like France has. We can make believe and hope that businesses will spontaneously fix this glaring error on their own, but to believe they will is naïve. We are currently witnessing what businesses do when left to their own will. They become free riders as quickly as possible. They will happily offload any cost they can onto someone else, regardless of the harms to themselves and others.

We need to make up for their detrimental selfishness through appropriate incentives. Getting what we want out of life and society is all a game of finding the right incentives and disincentives. I believe that this training tax will lead to a better society where more people get what they want. I see no reason it should not be enacted. And the only reason I can think of why it would be resisted is greed and undue political influence wielded to businesses who want to continue being free riders.



Do you think employers do enough to train their employees? Would you take a different job or change career fields if employers would provide you training on the job? Do you think the economy would benefit from more skilled workers? Would more training and more skilled workers lead to a better economy and everyone getting more of the stuff they want? Can you think of a better way to incentivize training by employers? Let me know in the comments!




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