Improving School-to-Work Transitions

Chapter 8. Smoothing the Transition from School to Work: Building Job Skills for a Local Labor Market

Chapter 8 Smoothing the Transition from School to Work: Building Job Skills for a Local Labor Market Nan L. Maxwell MOVING FROM SCHOOL into the labor market is often a difficult transition for youths. Even though many high school students work for pay while still in school, they often spend the years after leaving school moving from one job to another. The long-term effect of this churning is indeterminate. Some research argues that early unstable labor-market experience per se either is unrelated to labor-market outcomes as an adult (Gardecki and Neumark 1998) or is beneficial (Becker and Hills 1980, 1983), if appropriate skill matches ensue (Osterman 1980). Other research points to harmful long-term results from this sort of floundering, finding that youth unemployment or job churning reduces subsequent wages (D’Amico and Maxwell 1990; Lynch 1989; Ellwood 1982; Meyer and Wise 1982), and that employment stability increases adult wages (Neumark 2002). In any event, programs and policies that produce a quicker matching of youths’ skills with those required by employers can produce efficiency gains, as demonstrated by the success of programs in European high schools that build students’ job skills to connect with local employers’ needs (Vickers 1995). This finding was the impetus for the 1994 Schoolto -Work Opportunities Act (STWOA) of 1994. If school-to-work programs and institutions could build labor-market skills that are in demand in the local labor market, high school students enter247 ing the labor market could presumably make a smoother transition into the workplace. Implicit in the STWOA and many school-to-work programs and institutions is the assumption that building academic and workplace skills used in the local labor market will increase employment and wages for youths whose formal education ends in high school. The STWOA states as its purpose “to improve the knowledge and skills of youth” (section 3a, number 9). To this end, states were directed to use funds to encourage local partnerships of education, government , and employers and to “[develop] a system for labor market analysis and strategic planning for local targeting of industry sectors or broad occupational clusters that can provide students with placements in high-skill workplaces” (section 205, number 15). It stands to reason that if skills are needed in the labor market, more-skilled youths will have an increased probability of employment and higher wages than lesser-skilled youths as they move from school into the workplace. This general advice may provide little useful guidance to school-to-work practitioners, however, if skills demanded by employers are heterogeneous and successful schoolto -work transitions depend on acquiring particular skills that are in demand by firms. When skill demands are specific to local labor markets, school-to-work programs and institutions may be more successful when they provide students with skills in demand in the market they will enter. Thus, successful school-to-work efforts may require identifying skills in high demand in the jobs available to youths. These skills may or may not be those used once the youth gains labor market experience or those used as the foundation upon which to build skills for career progression. They are, however, the skills that boost employment and wages early in one’s career and, as a result, allow youths to gain a foothold in the labor market. For youths whose education ends in high school, that foothold is in relatively low-skilled entry-level positions, operationalized in this study as jobs available to individuals with no more than a high school education and no more than one year of work experience. We suggest that the role a skill plays in a youth’s transition into the workplace depends on its relative scarcity in the local labor market. If individuals competing for low-skilled, entry-level jobs possess a skill that many job seekers have, and thus firms have no difficulty in filling in existing positions, possessing the skill would 248 Improving School-to-Work Transitions neither facilitate employment nor increase wages. In fact, firms may find they can attract individuals at a lower wage if an excess supply of workers with the needed skill exists. But if firms have difficulty finding enough workers with the required skill, wages would increase in positions using the skill and youths possessing the skill would find employment easily. Thus, being equipped with skills for which there is high relative demand in a...