The Aspen Institute proposes lifelong learning accounts

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The concern in post-industrial nations about the scarcity of in-demand skills hurtles towards one bottleneck - who should pay to train the workforce? Prosperity immediately following World War Two created a unique climate for employer responsibility around skilling, reinforcing New Deal measures with the promise of lifelong employment in America’s boom industries. The likes of General Motors and General Electric established internal universities for uplift. The situation on the eve of the third decade of the 21st Century looks a little different, with the backdrop of automation propped up against lower employer investment in workforce development.

Even this pace of automation is questioned, of the hybridisation of all jobs into digital literacy can’t be disputed. Research from The Brookings Institution published in 2017 generated a kind of “digitalization index” for over 500 jobs in the U.S., roles that encompass 90% of the workforce*. The data showed that the average portion of digital content in roles rose 57% between 2002 and 2016, a noticeable change in 15 years even with the span of one working life.

Figuring out how to organise and pay for individual skill presents a major task for industry. While government spending does currently go towards courses, it pales in comparison to the amount spent on higher education ($180 billion). Even when considering that some higher education courses do offer workforce development, an emphasis is placed on getting students to upgrade from community colleges to universities. In other words, the federal budget doesn’t provide a major allocation for those already in the workforce who might be looking to retrain and qualify for adjacent roles in their trade.

Lifelong Learning & Training Accounts

In May 2018, D.C.-based think tank The The Aspen Institute’s Economic Opportunities Program proposed the creation of Lifelong Learning and Training Accounts (LLTAs) for all workers. LLTAs would allow employers, employees and government to deposit and store cash in a location for spending on training courses. Workers could use the cash at any time during their careers to pay for any education and training they choose.

The account is not designed as a financial savings vehicle, but a kitty of cash to be used regularly by the individual with a maximum balance of $10,000. Individuals can contribute $2,000 per year on a pre-tax basis, unless their Adjusted Gross Income exceeds $50,000. Governments (local and national) can make their own contributions to accounts and match these to the individual’s income with increased gearing to allow low-income workers to receive a larger contribution. As a result of this gearing, The Aspen Institute propose that 79% of the cost of the proposal would benefit individuals who make under $30,000.

For more on the paper and The Aspen Institute’s Lifelong Learning and Training Accounts, see aspeninstitute.org.

* “Digitalization and the American workforce”, Muro et al. (2017)