Mark Kleiman has an interesting post on the problem of job skills. The problem, which Kleiman lays out well, is that teaching general job skills (which can be as simple as learning to show up on time) does not pay for an employer. If the employee becomes more productive, the employer simply has to pay him more, or the employee can go elsewhere. Kleiman's proposal is to give the first long term employer (say at least a year) of at risk kids some fraction of their future pay, by giving the employer some fraction of their future Social Security payments. The idea strikes me as clever. If you provide general skills, you get paid in proportion to what you provide.

I see one difficulty. Kleiman argues that kids at risk do not pay for their own training because, among other reasons, they are too present oriented, and they do not know the benefits of this kind of training. If Kleiman is right, then a big advantage of learning in a job rather than in school is that a job offers something to lose if you do badly: a paycheck. The loss from doing badly in school may be distant and unknown. Then a big advantage of learning in a job is the prospects of being fired. Kids used to a bad school have no experience of forcible separation. Barring violence, doing badly in school does not usually involve expulsion (and if it did, so what?).

An at-risk kid takes a job, and is slow to learn general skills, such as showing up on time, and calling in sick rather than simply not showing up. But he still gets a paycheck. A valuable lesson is being fired, because then he learns the connection between those skills and his paycheck. So two problems with Kleiman's proposal as stated. The next employer gets nothing from teaching those skills, unless the employee is fired soon enough. Second, so long as the employee is likely to keep some kind of job in the future, there is an incentive to not fire the kid who is not learning. The employer still gets a payment in the future so long as he delays firing until the minimum time has run out. It seems to me these problems are fixable. First, make the payment an increasing function of time on the job, rather than all-or-nothing. Second, instead of a small percentage of all the employee's future Social Security payments, give the employer a larger percentage of those payments above some minimum. That way, the employer's contribution to job skills is more closely rewarded.

Here's an idea: rather than come up with a complicated new employment subsidy, why not just eliminate the minimum wage? The workers in question (teenagers) don't need the money to live and lower wages would encourage employers to hire very low skill workers, i.e., the aforementioned teenagers.

Employers who do a significant amount of training and dont want to "lose the investment" can perfectly well sign agreements with the relevant employees whereby the employee stays with the employer a given number of years or repays the cost of the training (or the additional pay that results from the training gets paid some time in arrears: that way, if the employee quits, the employer recoups something).