Wednesday, September 26, 2007

The Return on Investment in People

Starting in 1974, I spent about fifteen years at a university that was next to a major military base. To no one's surprise, many of my classmates, students, and co-workers were at that time currently or formerly in the military. While I was working at the campus computer center, I had three such co-workers who had two things in common: they were all former nuclear weapons technicians, and they were all going to college on the GI Bill.

This morning, National Public Radio's Morning Edition featured a story by John McChesney titled GI Bill's Impact Slipping in Recent Years. It's worth a listen. Some interesting facts from the story:

At the close of World War II, only 5% of Americans had college degrees.

Only 40% of the veterans of WW II had high school diplomas.

The GI Bill paid for full tuition and books and provided a modest living stipend.

Ten million WWII vets went to college on the GI Bill.

That number included fourteen who would go on to win the Nobel Prize.

Twenty-four who would go on to win the Pulitzer Prize.

The GI Bill would educate 91,000 scientists.

And 67,000 physicians.

As well as several presidents, senators, and Supreme Court justices.

How much did it cost? Educating the WWII veterans cost about $50 billion in 2007 adjusted dollars, and some estimates place the return to the U. S. economy at a equally adjusted $350 billion, a seven-fold ROI. The increase in tax dollars alone just from the boost in earning power for the newly minted college graduates more than paid for the GI Bill.

The story is part of a continuing series on the reduced effectiveness of the GI Bill. Given the statistics cited above, it would be hard not to be in favor cranking up the investment in education for current veterans.

But surely there's a more general lesson to be learned here regarding the ROI on investing in education for your employees. I've personally witnessed a large technology company reduce its educational subsidy from "your entire degree" to "just the classes we think are pertinent to your current project", and downsizing its employee training program from a rich set of intense forty-hour in-house classes to generic introductory web-based presentations. As both an employee, and as a former educator, it broke my heart to see how little interest the company had in investing in its people, beyond reminding them at every six-month review that "continuous learning" was critical to their continued employment. How they accomplished that continuous learning was left as an exercise for the employee.

Do we really think the ROI for those WW II vets is that substantially greater from the ROI we get from investing in the education of our employees? And as an employee, doesn't it suggest to you that education is virtually free, given the likely increase in your earning power?

Employees should aggressively seek training and education, whether that means choosing to work for companies that provide and subsidize it, or paying for it themselves.

I'd be interested in comments from any veterans on their experiences, good and bad, with the GI Bill, and its impact on their lives. And comments and suggestions from readers in general on their experience with training and education provided or subsidized by their employer.


Demian L. Neidetcher said...

I took advantage of the GI Bill. I think the 1-2 punch of being in a disciplined environment and then going into college works out well. Especially for someone who was originally un-disciplined to begin with like me.

There were other programs I took advantage of as well. I think Texas and Illinois were the only states (at the time) that will let you get a 4-year degree for free if you go in the military.

There were lots of smart guys in the Marines believe it or not. If you enjoy running and shooting it doesn't prove that you're smart but it doesn't necessarily make you stupid.

So yeah, to your main point. I think it's an amazing ROI that the country got. I'm not sure that it exactly translates into free college for everyone is good. You have a group of people that are older, know they want to succeed and are motivated. There is a sense that they've earned what they're getting (tuition) and they aren't inclined to waste it. It's a winning formula.

Having said all that, I'm not sure if college money is the best reason to join the military. If you don't believe in what you're doing it'll be a painful experience. But, the tuition assistance helps.

Canadian War Machine said...

I think the major disincentive is that the employer has no guarantee that'll you'll stick around after upgrading your skills with additional training. The US government, on the other hand, will get paid (via income tax) no matter where a vet lands.

Chip Overclock said...

Just to be clear, Mike, I think you mean a disincentive for the employer. For sure I'm a cynic at heart (comes with the supervillain territory). But I would like to think there's a company somewhere that thinks of education as an employee retention mechanism. But you're spot on with the government; they're winners no matter what. What does that say about free market forces? (I'm a fan of Adam Smith, but even he didn't think totally free markets worked.)