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The Economic Payoffs to Workplace Literacy

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This paper focuses on one of the potential benefits to improving the Nation's literacy the economic payoffs. A more literate workforce provides economic benefits to the members of the workforce themselves, to employers, and to society. Workers who improve their basic skills through participation in workplace literacy programs should be more productive and hence earn higher wages and have greater job security. Employers with more productive workers will be more competitive in their industries and will be more profitable. Society gains by having a more productive and stable economy, by having more individuals employed with higher earnings and thus paying more in taxes, and by having fewer individuals unemployed who would otherwise be drawing transfer income from the government. The key nexus in the argument that workplace literacy engenders significant economic benefits is that a more literate worker will be more productive on the job. Were that not the case, the economic benefits to workplace literacy programs would all but evaporate. Whereas literacy advocates would easily accept the notion that more literate workers are more productive, the evidence is far from clear. In fact, the status quo provides a strong counterargument. The business sector is characterized by a very low incidence of workplace literacy programs despite the fact that there is a substantial need, as measured by the percentage of the workforce who are deficient to some extent in basic skills (see Hollenbeck 1993). It can be legitimately asked why, if workplace literacy programs are so beneficial economically, is there such a paucity of programs? Why haven't more employers increased their profits by adopting such programs? This paper presents findings that suggest that there are substantial productivity payoffs to workplace literacy programs. The answer to the question as to why there is such a low incidence of programs is that there must be market failures such as inaccessible capital, lack of information, or uncertainty about costs or payoffs that are dampening more widescale adoption of programs. In the next section of the paper, I review prior literature on the economic payoffs to workplace literacy programs and suggest a model for determining their payoffs. The third section describes the data that I use to analyze the issue, which come from two national surveys of individuals. The fourth, fifth, and sixth sections of the paper present my empirical findings. In the fourth section, I analyze participation in workplace literacy programs the characteristics of the individuals who participate. The fifth section presents tabular analyses of program characteristics as reported by the participants and in the sixth section, I analyze the economic benefits to workers from participation. The final section presents conclusions.

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Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 93-21.

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Date of creation: Aug 1993
Handle: RePEc:upj:weupjo:93-21
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