Ever since the days of LBJ, the country has gotten more and more involved in the subsidization of postsecondary education. The results have been disastrous — far higher costs and far less actual education. One might think that ending this policy blunder would be a high priority. Instead, we now have a plan that would extend it — “Workforce Pell” grants.

In today’s Martin Center article, Adam Kissel looks at the pros and cons.

Enter short-term, workforce-oriented Pell grants. This is a quite different kind of grant with a different goal: to get students into a credential and back out into the workforce as quickly as reasonably possible, or at least to mark the credential as a meaningful step on the way to an even stronger one. What regular Pell leaves on the table — lots of recipients without degrees — workforce Pell replaces with targeted, high-quality credentials.

Enter short-term, workforce-oriented Pell grants. This is a quite different kind of grant with a different goal: to get students into a credential and back out into the workforce as quickly as reasonably possible, or at least to mark the credential as a meaningful step on the way to an even stronger one. What regular Pell leaves on the table — lots of recipients without degrees — workforce Pell replaces with targeted, high-quality credentials.

That sounds good, but proposals for government programs to improve upon the results of the free market often do. The key to good analysis is to imagine the unintended consequences and hidden costs. That’s what Kissel does.

For one thing, companies are already paying to get training for their employees. Training an employee who is paid more highly represents an even greater value-add for the company — otherwise the company wouldn’t have increased his or her salary so much. The market was already working at an efficient level of capital investment in employees. But workforce Pell persuades companies at the margin — those for whom the extra training of employees did not make business sense — to go ahead and get some employees trained anyway.

For one thing, companies are already paying to get training for their employees. Training an employee who is paid more highly represents an even greater value-add for the company — otherwise the company wouldn’t have increased his or her salary so much. The market was already working at an efficient level of capital investment in employees. But workforce Pell persuades companies at the margin — those for whom the extra training of employees did not make business sense — to go ahead and get some employees trained anyway.

Read the whole thing.

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