Employer Training Needs in Hawaii

The Survey of Employer Training Needs in Hawaii was undertaken to gather information and data on the needs and preferences of employers in Hawaii regarding government assistance with training. The need for such information was created by passage of Act 68, Session Laws of Hawaii 1991, which created the Hawaii Employment and Training Fund "to assist employers and workers through innovative programs to include, but not be limited to, business-specific training, upgrade training, new occupational skills, management skills, and support services to improve the long-term employability of Hawaii's people." The survey was mailed to a stratified random sample of 5,886 establishments in the State of Hawaii. The response rate was excellent: Of the 5,886 who received the survey, 1,650 (or 28 percent) returned usable responses that are included in the analysis. A unique feature of the survey is that it obtained information on the training needs and deficiencies of seven separate occupational groups: Highly-skilled white-collar workers; sales and sales-related workers; administrative support (including clerical) workers; highly-skilled blue-collar workers; less-skilled blue-collar workers; service workers; and farming, forestry, and fishing workers. The results of the survey present a clear justification for policy along the lines of the Hawaii Employment and Training Fund: For only two occupational groups did more than one-third of employers say that their most recently hired employees were well-prepared for work. This basic finding suggests strongly that the underlying problem facing the labor market of Hawaii can be characterized as a skill shortage. Further, the results of the survey show that between 38 and 47 percent of employers (depending on occupational group) would like to see government provide some form of assistance with their formal training needs. In contrast, 15 to 23 percent of employers believe that government can do little to help with their formal training needs. In other words, about twice as many employers indicated that they would like to see government do something to assist with formal training as indicated that government could do little to help. Findings from the survey point to the importance of implementing policies that would assist two occupational groups and their employers: service workers and highly-skilled blue-collar workers. Seventy percent of employers who had job vacancies for service workers reported that they have difficulty filling those vacancies. Also, service workers stand out as having more acute skill deficiencies than any other group of workers. Finally, service workers' skill deficiencies appear to be of a kind that can be best remedied through formal training, and a relatively high percentage of employers 28 percent would like to see the training costs of their service workers subsidized. Regarding highly-skilled blue-collar workers, there is an acute labor shortage. The percentage of employers who indicate that they have difficulty filling vacancies for highly-skilled blue-collar workers is very high 68 percent and the percentage of these who report that lack of applicant training is a problem in filling skilled blue-collar vacancies 91 percent is far higher than for any other occupational group. For both service and highly-skilled blue-collar workers, the findings point to a problem of skill shortage that could be addressed through appropriate employment and training policy. There is also a somewhat weaker case for directly Employment and Training Fund resources toward two other occupational groups: sales and less-skilled blue-collar workers. The findings do not suggest a strong need to target certain counties or to vary policies from county to county. Neither do the findings suggest a strong case for targeting employers of a certain size, or for targeting employers in certain industries. Rather, the need is for targeting certain occupations in particular service and highly-skilled blue-collar occupations. The last section of the report suggests a two-pronged approach to implementing the Employment and Training Fund. The first approach would provide general training to service workers (and possibly others in need of improved general skills) by improving the linkage between workers who need to upgrade their skills and programs that could help them. The Employment Service as a strategically located information-gathering and counseling organization is the logical organization around which to integrate and link existing education and training programs, and to implement improvements in existing programs. The second approach would continue firm-specific training programs under the Aloha State Specialized Employment and Training Program (ASSET), and occupation-specific entry and upgrade training programs formerly funded by the High Demand Occupations Training program. The findings of the Survey of Employer Training Needs suggest gearing Hawaii's customized and occupation-specific training programs to the needs of service workers and highly-skilled blue-collar workers and their employers with the goal of alleviating skill shortages in these labor markets.employer, employee, job, training, Hawaii, Woodbury

Thermal analysis of HGFQ using FIDAP(trademark): Solidification front motion

The High Gradient Furnace with Quench (HGFQ) is being designed by NASA/MSFC for flight on the International Space Station. The furnace is being designed specifically for solidification experiments in metal and metallic alloy systems. The HGFQ Product development Team (PDT) has been active since January 1994 and their effort is now in early Phase B. Thermal models have been developed both by NASA and Sverdrup (support contractor) to assist in the HGFQ design effort. Both these models use SINDA as a solution engine, but the NASA model was developed using PATRAN and includes more detail than the Sverdrup model. These models have been used to guide design decisions and have been validated through experimentation on a prototypical 'Breadboard' furnace at MSFC. One facet of the furnace operation of interest to the designers is the sensitivity of the solidification interface location to changes in the furnace setpoint. Specifically of interest is the motion (position and velocity) of the solidification front due to a small perturbation in the furnace temperature. FIDAP(TM) is a commercially available finite element program for analysis of heat transfer and fluid flow processes. Its strength is in solution of the Navier-Stokes equations for incompressible flow, but among its capabilities is the analysis of transient processes involving radiation and solidification. The models presently available from NASA and Sverdrup are steady-state models and are incapable of computing the motion of the solidification front. The objective of this investigation is to use FIDAP(TM) to compute the motion of the solidification interface due to a perturbation in the furnace setpoint

Employee Benefits and Tax Reform

The current tax treatment of pensions and health insurance in the United States is a hybrid that lacks consistency under either an accrual income tax system or a consumption tax system. Under an accrual income tax, employer contributions to pension plans represent an addition to wealth that would be taxed at the time they are made. The interest earned on pension contributions also represents an addition to wealth that would be taxed annually. When a worker retires, all applicable taxes would already have been paid on the benefit, and the flow of retirement income received by the worker would not be taxed. Similarly, employer-provided health insurance arguably represents a current benefit that, under the income tax, should be taxed annually as current income. Under a consumption tax, things are different for pensions. The idea of the consumption tax is to tax what an individual takes out of the system. Since pension contributions represent saving, they are not taxed when they are made. Neither is the interest earned on pension contributions taxed under a consumption tax, since it is reinvested and accumulated. Only when the worker retires and starts to draw retirement income are pension contributions taxed. And only the portion of the retirement income that is consumed is taxed if only half is consumed, taxes are paid only on that half. Although pensions fare better under a consumption tax than under an income tax, it is unclear whether health insurance would, too. If health insurance expenditures are considered current consumption (as most economists believe they should be), the same tax that applied to any other consumption would apply to employer contributions to health insurance. On the other hand, one could argue (as in footnote 3) that health insurance is a merit good and medical expenditures are unfortunate, so that both pensions and health insurance should be excluded from the definition of consumption. The existing tax treatment of employee benefits in the U.S. is a hybrid because we nominally have an income tax under which employer contributions to both pensions and health insurance could be taxed as income. But both receive favorable tax treatment pensions are tax-favored in that current pension contributions and interest on previous contributions go untaxed, and health insurance contributions are tax-free. The tax treatment of pensions is consistent with a consumption tax, not an income tax, and the prevailing view among economists is that the tax treatment of health insurance is consistent with neither. Current attempts to move toward a consumption tax have been welcomed by most economists both because most subscribe to the basic claims that are made for the consumption tax increased saving, improved economic growth, and greater efficiency and because the consumption tax promises to bring greater coherence to a system that, despite improvements during the last 15 years, still has some basic inconsistencies. Major concerns with the consumption tax have been raised by many employers, though, who are comfortable with the existing tax treatment of employee benefits and less obsessed than economists with the notion of allocative efficiency or with making the tax system conform to a consistent theory of taxation. Employers especially employers of skilled labor have at least two reasons for wanting to provide employee benefits and accordingly find the favorable tax treatment of benefits attractive (Rosen forthcoming). First, provision of employee benefits may have externalities that enhance the productivity of workers. For example, employers may want to ensure that their workers have good access to health care so that they are more likely to stay healthy. And they may want to provide pension benefits to workers to relieve workers of the burden and worry of planning and providing for retirement. Second, benefits provide a way for employers to create a bond between the firm and the worker. Such a bond and the commitment between the worker and firm that is implied are especially important in firms where workers have (or need to acquire) a significant amount of firm-specific human capital. Employers, who must bear most or all of the cost of investing in firm-specific training, can reap the returns to their investment only if workers remain with the firm over a long period of time. The importance of these two effects has not been quantified convincingly, although there is some evidence that the latter is important (see, for example, the review by Hutchens 1989, or the evidence presented by Topel 1991). But existing evidence suggests that the loss of favorable tax treatment of employee benefits would make it more costly for employers to provide benefits and could indeed lead to social costs in the form of broken job matches that efficiency considerations would suggest should have continued. Section I below briefly discusses the essential features and implications for employee benefits of some of the tax reform proposals that were introduced during the 104th Congress and promise to be considered further in the future. Section II then presents some estimates of how these comprehensive tax reforms would affect (a) the coverage of workers by employer-provided pension and health-insurance plans, (b) employer contributions to pension and health insurance plans, and (c) the shares of compensation received as pensions and health insurance.employee, benefits, tax, reform, Woodbury

Assessment of the NASA code FDNS2D for computation of film cooling effectiveness

The role of computational fluid dynamics (CFD) programs is usually one of analysis. Generally they are not used in the design phase of a project. There was an effort to integrate CFD codes into the design phase of combustion devices, specifically, in the design of the Space Transportation Main Engine (STME) nozzle. Before the results of such analyses can be accepted, the credibility of the CFD codes upon which they are based must be established. The effort to assess the capability of the NASA code FDNS2D to compute the heat transfer to a solid bounding surface is detailed. Specifically, high speed flow over a flat plate is considered, and the resulting wall shear stress, and heat transfer are computed. These values are compared against analytical results (for wall shear stress) and experimental data (for heat transfer). A brief description is given of the FDNS2D code, with special emphasis on how it handles solid wall boundary conditions. The flow conditions and the FDNS solution are presented, along with comparison to analytical and experimental data. Some intermediate observations are then made, followed by a recommendation for adoption of an alternate method for computing the wall heat flux

Unemployment Insurance and Unemployment: Implications of the Reemployment Bonus Experiments

We translate the results of the three reemployment bonus experiments that were conducted during the 1980s into (a) impacts of a 10-percentage point increase in the Unemployment Insurance (UI) replacement rate on the expected duration of unemployment; and (b) impacts of adding 1 week to the potential duration of UI benefits on the expected duration of unemployment. Our approach is to use an equilibrium search and matching model, calibrated using data from the bonus experiments and secondary sources. The results suggest that a 10-percentage point increase in the UI replacement rate increases the expected duration of unemployment by .3 to 1.1 week (a range consistent with, but only somewhat narrower than, the existing range of estimates), and that adding 1 week to the potential duration of UI benefits increases the expected duration of unemployment by .05 to .2 week (which is toward the low end of existing estimates).unemployment, insurance, bonus, experiments, Davidson, Woodbury

Retiree Health Benefits and Retirement

Employer-provided health benefit coverage for workers who retire before age 65 has fallen over the last decade. We examine a cohort of male workers from the Health and Retirement Survey to examine questions about the dynamics of retiree health benefits and the relationship between retiree health benefits and retirement behavior, which is important for the debate over increasing health coverage for older Americans without reducing work incentives. On dynamics, we find that between 1992 and 1996, 24 percent of full-time workers who had retiree health benefits lost their coverage, while 15 percent of full-time workers who lacked coverage gained it. Also, of the full-time employed men who were covered by retiree health benefits in 1992 and had retired by 1996, 3 percent were uninsured, and 15 percent were covered by health insurance other than employer-provided insurance. On the relationship between retiree health benefits and retirement, we find that workers with retiree benefits were 29 to 55 percent more likely to retire than those without. We also find that workers who are eligible for retiree health benefits tend to take advantage of them when they are relatively young.Marton, Woodbury, health insurance, employee benefits, retirement, elderly, employment, retiree health benefits

Health Insurance Tax Credits and Health Insurance Coverage of Low-Earning Single Mothers

The Omnibus Budget Reconciliation Act of 1990 introduced a refundable tax credit for low-income working families who purchased health insurance coverage for their children. This health insurance tax credit (HITC) existed during tax years 1991, 1992, and 1993, and was then rescinded. We use Current Population Survey data and a difference-in-differences approach to estimate the HITC’s effect on private health insurance coverage of low-earning single mothers. The findings suggest that during 1991–1993, the health insurance coverage of single mothers was about 6 percentage points higher than it would have been in the absence of the HITC.Retirement; Health insurance; Low-wage workers; Tax credits and subsidies

Wage-Rate Subsidies for Dislocated Workers

An array of innovative policies has been suggested to address more effectively the needs of dislocated workers. In this paper, we model and simulate the impacts of a wage-rate subsidy (or salary supplement) program in which a dislocated worker who becomes reemployed would receive a payment equal to one-half the difference between the wage previously earned and the wage currently earned. The simulations are based on a search model that is institutionally rich and that provides estimates of the impacts of a wage subsidy by incorporating empirical results from the reemployment bonus experiments that were conducted in the mid- to late-1980s. The model includes several groups of workers other than dislocated workers and therefore provides estimates of the degree to which these other workers might be crowded out of jobs by the wage subsidy program. The results suggest that a wage-rate subsidy paid for two years after reemployment would shorten the unemployment spells of dislocated workers by nearly 2 weeks, and would increase employment of dislocated workers by about 900 to 1000 per 100,000 in the labor force. But the simulations also raise the possibility that the gains for dislocated workers could come at the expense of other groups of workers; that is, other groups of workers could experience small increases in unemployment duration, and decreases in employment levels that almost fully offset the gains for dislocated workers. Three factors may mitigate these crowding-out results crowding out is widely dispersed over various groups of non-dislocated workers, the structural changes that result in dislocation of some workers (and drive the need for a policy like a wage subsidy) benefit non-dislocated workers, and the crowding-out results are quite sensitive to one of our assumptions. We also compare the wage-rate subsidy program with a reemployment bonus, and show that the two can be structured so as to give identical results.dislocated, displaced, workers, wage, subsidies, Davidson, Woodbury

The Optimal Dole with Risk Aversion, Job Destruction, and Worker Heterogeneity

This paper extends earlier research on optimal unemployment insurance (UI) by developing an equilibrium search model that encompasses simultaneously several theoretical and institutional features that have been treated one-by-one (or not at all) in previous discussions of optimal UI. In particular, the model we develop allows us to determine the optimal potential duration of UI benefits as well as the optimal UI benefit amount; assumes (realistically) that not all workers are eligible for UI benefits; allows examination of various degrees of risk aversion by workers; models labor demand so that the job destruction effects of UI are taken into account; and treats workers as heterogeneous. The model suggests that the current statutory replacement rate of 50 percent provided by most states in the United States is close to optimal, but that the current potential duration of benefits (which is usually 26 weeks) is probably too short. This basic result--that the optimal UI system is characterized by a fairly low replacement rate and a long potential duration-- conflicts with most of the existing literature on optimal UI. We argue, however, that the result is consistent with a large literature on optimal insurance contracts in the presence of moral hazard.unemployment insurance, job destruction, Davidson, Woodbury