Jeb Bush, Terry McAuliffe: Retraining, instead of layoffs, will speed economic recovery
Instead of laying off workers, we must train and retain them, to avoid the worst version of the recovery ahead.
Drastic change is upon us as a country and as a world. We are facing unemployment levels last seen during the Great Depression, overnight tens of millions of Americans have been laid off or furloughed, and all signs point to scores more facing a similar fate in the coming months.
We believe in, and need, an American recovery that is swift — one where workers find higher pay and higher purpose, and our employers become better equipped for the future of work.
A massive remobilization of the workforce is upon us, and our response will determine the strength and speed of our recovery. If it happens en masse by firing and rehiring, the costs to employers, employees and their families will be great. We must abandon our usual approach for something innovative.
If we can mobilize within employers, by providing training or learning leaves (paid or unpaid leave paired with a training, education or skill development opportunity), the costs of this recession will be minimized, the return on investment improved and the skills gap closed. We hope that employers and policymakers will consider learning leaves as a bold new approach to avoid unnecessary pain in the near term, and a way to invest in the long-term future of the workforce.
Costs of layoffs are steep
There is evidence that companies underestimate how devastating layoffs are in the medium and long term — not only to workers and the economy, but also to their families and local communities. These layoffs may ultimately be unnecessary, and are certainly a missed opportunity to develop a competitive advantage in the future of work.
Companies traditionally manage their workforce with a binary on/off switch: Fire workers now, hire others later. Today, we should look to a different tactic: Train and retain employees; and where companies must reduce payroll costs, do so while investing in their employees by using learning leaves. This transforms a traditional furlough into the chance to learn new skills.
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The length of a learning leave can vary to meet specific objectives. Companies can use them strategically to fill their skill gaps and upgrade employees to qualify for hard-to-fill, high-skilled roles. This is a flexible, smart approach to making good on a no-layoffs policy.
This approach was not historically possible when the main mechanism for education and training was the classic two- or four-year college degree programs, which are long and increasingly cost prohibitive. The rise of intensive short-form skill boot camps (such as Flatiron School and General Assembly) and massively open online courses (or MOOCs) have brought top university courses online for free or low cost. Combined, these models have created an entire ecosystem of options available for companies in every industry and nearly any skill.
The most innovative universities are starting to embrace nondegree and intensive skills training options as well. Startups like Degreed are helping companies navigate the wealth of these resources for their employees; platforms such as Learn In recently launched specifically to help companies manage learning leave. Finally, when layoffs cannot be avoided, companies such as Outset provide laid-off employees with training options.
Upskilling employees using high-quality, lower-cost options yields large positive returns for both the company and employee. Today, our government encourages learning by subsidizing traditional higher education. Now, there is an opportunity for Washington and the states to support dedicated learning leaves.
Learn from 2008 recession
Few companies are so pressed that they cannot implement better alternatives to sudden layoffs. During the 2008 recession, Toyota North America was able to avoid layoffs even as sales hit a slump not seen since the 1980s. Rather than layoffs, they reduced work hours, instituted temporary pay cuts and invested the extra employee time into additional training. Their executives said they didn’t want to “squander the opportunity to retrain and refocus” their workforce.
Another example to learn from is Nokia. In 2008, Nokia learned through traumatic experience the massive debts incurred when they laid off an entire manufacturing plant with little thought to the social impact.
Shutting that plant cost the company $85,000 per employee. Three years later when layoffs again became necessary, executives rethought their approach. As an alternative to layoffs, the “Bridge” program provided multiple options for employees, such as tuition assistance for those who wanted to learn new skills or pursue a new profession entirely. This approach to layoffs not only cost significantly less ($3,100 per employee), but it had a satisfaction rate of 85%, even among employees who were let go.
American philosopher Eric Hoffer said, “In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists.” Let us learn from companies that were on the leading edge in 2008, and not miss this opportunity to retrain, retain and refocus the American workforce.
Jeb Bush served as the 43rd governor of Florida; he is president and chairman of the Foundation for Excellence in Education. Terry McAuliffe served as the 72nd governor of Virginia.
