Employee Training Programs in U.S. Businesses

Abstract

According to a recent issue of Training Magazine. U.S. organizations with fifty or more employees spent $32 billion on formal programs for employee training and development. Although human resource managers argue that training is critical for developing a productive workforce, very little is known about how companies make decisions about budgets for formal training and whether such training increases measured labor productivity. Previous research by labor economists on employee training has focused on the impact of training on the individual’s success in the labor market, i.e. how training raises the individual’s wage and reduces the probability of a layoff. Economists have also studied why employers are more likely to train certain individuals than others, and, in particular, have shown that individuals who are expected to stay with the firm are more likely to be the recipients of training. Hence, economic research on training has been concerned with the impact of investments in training on the distribution of earnings. Likewise, research on training by industrial and organizational psychologists has been conducted at the individual level, focusing on the impact of training on the employee’s cognitive skills, work effort, and morale.