Description

The question of why some employers opt to lay off current workers and hire new workers with different skills while other employers retrain and retain their workers was examined. First, the literature on employer-provided training and the role of social capital in the workplace was reviewed. Next, data from a 1994 national employers survey of firms in the manufacturing sector with more than 100 employees (of the 4,633 eligible establishments contacted, 3,358 (73%) responded) were analyzed to test the following hypotheses: (1) retraining should be more common where employers use work systems that rely on social capital (strongly supported); (2) the incidence of retraining should be greater where fixed employment costs are greater (mixed support); (3) retraining should be greater where other employer-provided training is greater (rejected); and (4) employers who retrain at-risk employees do so as part of a general policy of progressive employment practices (not supported). The analysis established that retraining is driven by the goal of preserving the social capital among current employees that is generated by specific systems of work organization. The explanations that retraining is just an employee benefit driven by employer paternalism or is simply part of an overall strategy of investment in training were rejected. A variable correlation matrix is appended. (Contains 59 references.