Needed: A GI Bill for the Millions of Workers Displaced by the Pandemic

The federal government should create new vouchers for the 10 million or more workers whose jobs will have disappeared in the COVID-crisis.

More than 50 million people have claimed unemployment benefits since the pandemic began in March. The brutal reality is that at least 10 million of those sidelined by the pandemic are unlikely to get their jobs back once the immediate crisis is over. We also know from past experience that most of these workers will require more education and training to make a successful return to the work force. We need a GI Bill for them.

If the government embarks on a much-needed infrastructure initiative, some of the displaced workers will find employment in various rebuilding projects similar to the public works and service efforts during the Great Depression. But most of these jobs will not be permanent and they will not provide participants with the skills they need to re-enter the work force for good.

So the question remains: What are we as a society willing to do to ensure that many millions of displaced workers are educated and trained for new and possibly even better jobs than they had before the pandemic struck. The temptation among many may well be to rely on the student financial aid and training programs already on the books. But this temptation should be resisted for at least two reasons:

First, the existing student aid system is essentially broken. By design or unintentionally, these programs have contributed to explosive college costs, excessive student loan burdens, too little equity, and inconsistent quality for the 20 million students who currently enroll every year. Making these same programs available to 10 million displaced workers will strain the existing programs even more and ultimately make them less ineffective.

Second, the existing publicly-funded aid programs are not designed to meet the needs of the millions of people who will be displaced by the pandemic. These programs are designed primarily to help students whose families lack the resources to pay for college. To be sure, Pell Grants and student loans are essentially voucher programs that put money in the pockets of students and let them vote with their feet where they go to college.

But vouchers only work well when prices are stable and when the amount of the voucher is not geared to provider-set prices. When this is not the case, the providers of the education and training tend to charge more than they otherwise would and the benefits of the voucher accrue more to the provider than to the student recipient. A prime example was the initial GI Bill after World War II which allowed all institutions to charge a maximum of $500, pegged to what Harvard charged then. Many public universities raised their tuition as a result and program rules were then changed to pay lower monthly benefits uniformly for all institutions.

What is needed for displaced workers is a different system of financing. Luckily, the GI Bill — the longest-standing federal program — is much better suited to meet the needs of newly displaced workers. Since it was first enacted in 1944, the GI Bill has opened post-secondary educational opportunities for generations of veterans returning from service in wars or in peacetime. With some important changes, a GI Bill for displaced workers could rescue millions of people who now have little hope of regaining their economic footing.

A key feature of the new displaced worker GI Bill would be that it would pay providers different amounts for different types of education and training.

For example, for displaced workers who lack basic skills, the new GI Bill should pay the providers of remedial courses based on performance. The more that basic skills are improved, the more the provider would be paid. This system would be a big improvement over the current system in which students taking remedial courses must pay tuition and often must borrow large sums simply to dig themselves out of the hole which often becomes only deeper.

For those displaced workers who possess basic skills but need retraining to meet labor force needs, the new vouchers would be available for a wide range of vocational training programs including, perhaps, apprenticeships. Again, the vouchers would pay providers a contracted amount and the displaced worker would pay nothing for the training and would not need to borrow.

Displaced workers who have attended or graduated from college would also be eligible for the new vouchers that would allow them to go back to college in a new course of study or they could choose various forms of vocational training. Even those displaced workers with advanced degrees would be eligible for the new vouchers to help change their career path.

The second change from the traditional GI Bill arrangement would be for the federal, state and local governments jointly to establish a network of Displaced Worker Centers (DWCs) across the country to administer the new displaced worker voucher program. The services provided by these DWCs, which could be offered online or in person, would include: certifying that the workers qualify as displaced; assessing their skills and aptitude and then match them with programs that will allow them to re-enter the work force with a marketable skill. The displaced worker network would also issue the vouchers and determine the level of payments to cover the costs of different kinds of education and training. Providers would also have to be certified as qualified and viable in order to receive the voucher payment.

Some providers of education and training will be more anxious to accept the vouchers than others. Colleges and universities where the demand for seats both in-house and online is sufficient to meet supply will be less inclined to participate because they are doing okay in the existing system. But there are many hundreds of colleges and other providers of post-secondary education and training where students will be in short supply in the post-pandemic world; they would welcome displaced workers either on campus or online.

To pay for their living costs, displaced workers could continue to receive enhanced unemployment benefits while enrolled in acceptable programs. In the alternative, Pell grants could be expanded into a program that meets the living expenses of those who qualify for the new vouchers. This is a change I have advocated for traditional college students as well so that in the future the Pell program would provide a foundation of meeting living expenses for students who qualify based on their family’s financial status. Under this construction, states and institutions would be primarily responsible for setting charges and providing enough financial aid to allow for enrollment of students from the full range of family income and circumstances.

The cost of the new GI Bill would indeed be steep. It could easily reach $50 billion per year for several years until retraining of the 10 million displaced workers could be undertaken. But the cost of having 10 million of more workers without a chance to regain employment would be so much higher.

Art Hauptman has been a public policy consultant specializing in domestic and international higher ed finance issues for nearly a half century.

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