Career Readiness After School: Employers Foot the Bill

While we tend to think about career readiness in terms of students preparing for the workforce, American employers play an enormous role in the continual upgrading of employee education. Those who are already highly skilled are the most likely to receive additional formal training from their employers.

Take Phil Gurbaugh, who graduated with a double major in math and physics in 2009, when the recession’s impact on the job market at all entry points was tough. Less than 5 percent of new job openings are filled by job seekers just coming out of school. And while hard science majors are typically encouraged to continue on the academic path to pursue higher degrees before entering the job market, Gurbaugh wasn’t interested in pursuing further studies.

Employee Education

“I wasn’t too prepared for the job market,” he says. “It was not something I was thinking about. Initially, I was leaning more on the mathematics side, [thinking I’d] go into financial advising or something like that.”

Boot camp for new employees

A neighbor recommended he consider analytics company SAS. Gurbaugh soon entered one of the boot camps SAS uses to train new employees in areas like sales, professional services, and technical support.

Gurbaugh’s cohort had seven people, mostly fresh out of college, with a variety of backgrounds, including computer science and electrical engineering.

“You’re given three months to get up to speed with all of the technology, which is huge in preparing you for your future role,” says Gurbaugh, who today works at the same company. “Every day, I call upon something I learned through the boot camp.”

Why employers invest in worker education

It might seem counterintuitive for a company to invest three full-time months in training somebody who already holds a degree. But employers are more likely to train those who already have qualifications, putting 58 percent of the money they invest in formal training to upskill workers with a college education, according to the 2015 report “College Is Just the Beginning: The Employer Role in $1.1 Trillion Postsecondary Education and Training System,” published by Georgetown University’s Center on Education and the Workforce.

Employers spend more than colleges or government agencies on higher education and job training in the U.S. Employers outlay $590 billion of a total $1.1 trillion spent annually.

Anthony Carnevale
Anthony Carnevale

Companies usually invest their training hours and dollars into existing employees. Employers “don’t want to train unskilled workers. The return is low,” says Anthony P. Carnevale, director of the Georgetown Center and co-author of the study. “They train engineers or managers, who already come in with high skills. It’s like putting money into stock.”

Degree indicates training potential

The longer an employee is at a job, the more insight a company has into if it’s a reliable bet to train and retrain that person. Having an earned credential in hand indicates that they are ready to be trained. Each subsequent training makes the individual more qualified and more valuable to the company.

Most of the 4.5 million job openings in the U.S. are filled by internal hires. Unemployment rates for holders of at least a bachelor’s degree are at a low of 2.5 percent, compared to 5 percent of the general population, according to the December 2015 report from the Bureau of Labor Statistics, indicating a relative scarcity.

Postsecondary qualifications desired

In the 1970s, the majority of jobs required a high school degree. Today, the number has flipped, with most requiring postsecondary qualifications.

“Almost all the hiring employers do is of experienced workers,” says Carnevale. “They’re looking for qualifications and experience.”

Employers train because it gives them a competitive advantage—and because they often have no choice.

“Things change on the job too much and too fast not to train,” says Carnevale. Many employers try to do more training informally because formal training costs too much money. And when possible, employers try to get the schools to do more and more to prepare people to be training ready, he adds.

For example, in the 1960s, the vast majority of engineers in manufacturing had high school degrees. They learned on the job. In the 1990s, most people who worked with computers never earned a computer degree. But as the demand grew for engineering and computing, those skills got passed back from the employers into the education system, and now there are all kinds of majors with computers and engineering.

“That’s the natural way the economy works,” says Carnevale. “Is it going to get even more aggressive? I think yes, it will.”

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