Underinvestment in on-the Job Training?

Abstract

[Excerpt] A growing number of commentators are pointing to employer sponsored training (OJT)as a critical ingredient in a nation's competitiveness. American employers appear to devote less time and resources to the training of entry level blue collar, clerical and service employees than employers in Germany and Japan (Limprecht and Hayes 1982, Mincer and Higuchi 1988, Koike 1984, Noll et al 1984, Wiederhold-Fritz 1985). In the United States, only 33 percent of workers with 1 to 5 years of tenure report having received skill improvement training from their current employer (Hollenbeck and Wilkie 1985). Analyzing 1982 NLS-Youth data, Parsons (1985) reports that only 34 to 40 percent of the young workers in clerical, operative, service and laborer jobs reported that it was "very true" that "the skills [I am] learning would be valuable in getting a better job." The payoffs to getting jobs which offer training appear to be very high, however. In Parson's study, having a high learning job rather than a no learning job in 1979 increased a male youth's 1982 wage rate by 13.7 percent. While the 1980 job had no such effect, the 1981 job raised wages by 7.2 percent when it was a high learning job rather than a no learning job.