In several ways already mentioned, responding to changes in the sub-baccalaureate labor market--for example, sectoral changes as demand fluctuates or changes in work requirements as technology or work organization shifts--is sometimes difficult because of the inconsistency of incentives between providers and employers because of lags in the decisions of educational institutions, and because of inadequacies in the information available to potential students. Many of these lags can be reduced by efforts to strengthen connections between employers and educational institutions, as described in the recommendations below.
However, there are still other problems in the process of adjustment in sub-baccalaureate labor markets, some of which cannot be readily reformed. One of these stems from the local nature of sub-baccalaureate labor markets. The local focus of both those searching for employment and of employers means that occupational shortages can occur in a particular region while there are surpluses nearby since the mobility that might otherwise eliminate both shortage and surplus is unlikely to take place or takes place only slowly. One implication is that sectoral and occupational changes involving geographical relocation require more time than they would if sub-baccalaureate labor markets were not so local or than they would in the markets for baccalaureate-level individuals operating in regional and national labor markets.
Another difficult problem involves the cyclical variation in the sub-baccalaureate labor market. The periodic recessions in sub-baccalaureate labor markets (including the period of this study), during which there are very few hires, reduce the incentives for individuals to invest in lengthy training. (This problem is exacerbated, as we saw in the case of machinists, when the period of on-the-job experience required to move into positions of substantial responsibility and earnings is relatively long.) This aspect of cyclical variation may be further reinforced by the tendency for enrollments in community colleges and technical institutes to increase during recessions, leading to more students precisely when the labor market is unable to absorb them. As in the case of the local nature of the sub-baccalaureate labor market, it is difficult to know what to do about cyclical variation,[110] but it remains an issue whose effects need to be considered.
[110] There have been proposals for counter-cyclical training where instead of laying off workers during recessions, firms use the slack time for retraining. In some sense, some counter-cyclical training does take place when workers are laid off and then enroll in postsecondary institutions for retraining--but this approach destroys the connection between employees and specific firms, wastes the specific human capital accumulated by workers in firms, and places the entire burden for funding counter-cyclical training on employees.