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Abstract

I. Introduction

II. Creative Destruction

III. The Failure of Government “Adjustment Assistance” ... A. Components of Training ... 1. Elements of Training ... 2. Tools for Training ... 3. Economics of Training ... 4. Institutions for Training ... 5. Barriers to Private Sector Skills Training ... B. Weaknesses of Existing Programs ... 1. Janesville, WI: A Case Study ... 2. Registered Apprenticeships Are Not the Answer ... C. Labor Department Proposed Rule for Industry-Recognized Apprenticeships

IV. Textile Industry: A Case Study ... A. Mechanizing the Basics: Teaching in Surrogate Families (1800–1840) … B. The Speedup and Stretchout—Rings and Draper Looms: Informal Worker-Level Tutelage (1840–1880) ... C. The South Rises: Meeting the Need for Institutionalized Education (1880–1930) ... D. Global Markets: Trying to Shift the Responsibility to the Government (1930–2000)

V. Other Adjustment Mechanisms ... A. Go West, Young Man! ... B. Markets and Mobility ... C. Unemployment Compensation

VI. Realistic Policy Directions ... A. Restructure the Unemployment Compensation System to Provide Incentives to Relocate to Find Work ... B. Target Student Loans and Reform For-Profit Trade Schools ... C. Resuscitate the Apprenticeship Concept

VII. Conclusion

This Article begins, in Part II, by explaining the concept of creative destruction, which is the engine of prosperity in all market economies. Creative destruction inherently disrupts labor markets and makes the skills of many existing workers obsolete. Part III analyzes the dismal record of government-sponsored retraining programs in facilitating worker adjustment. It explains why employer-sponsored training programs can be more effective but are largely absent during economic downturns, when they are needed most.

Part IV recapitulates the history of the textile industry and shows how labor markets adjusted to several waves of creative destruction. It reviews the technologies that played leapfrog in the textile industry from 1817 to 2017, each creating greater labor productivity. It explores the labor markets that connected workers with the machines and focuses on specific adjustment mechanisms that allowed workers to adapt to new technologies. Few of them were government sponsored.

This Article then shifts its focus to the future, projecting the course of further technological disruption and exploring what public policy should do about it. It concentrates on reshaping the unemployment compensation system to encourage worker mobility, strengthening worker training programs that combine classroom instruction with on-the-job experience, and considers the possibility of reforming for-profit trade schools to provide some of the training. It recommends a fundamental restructuring of the Labor Department’s apprenticeship program, if it is to be continued at all.

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