The rapidity of innovation and the unpredictability of the directions it may take imply a need for considerable investment in human capital. Workers in many occupations are being asked to strengthen their cognitive skills; basic credentials by themselves are not enough to ensure success in the workplace. Workers must be equipped not simply with technical know-how but also with the ability to create, analyze, and transform information and to interact effectively with others. Moreover, that learning will increasingly be a lifelong activity.

Richard Judy of the Hudson Institute reports that 60% of future jobs will require training that only 20% of present workers possess. Of the 25 occupations predicted to have the largest and fastest employment growth, high pay and lowest unemployment rate, 18 require at least a bachelor's degree (1998-1999 Occupational Outlook Handbook). Currently, 25% of the U.S. population does not attend college, and 50% of African-American urban residents lack a high school diploma.

Studies by the U.S. Department of Labor have shown that about 70% of training dollars spent by companies is targeted to managers, professional and technical employees. Other studies note the disparity in training expenditures by small versus large companies: employees of large companies are 2.2 times more likely to have access to employer-funded educational programs than are employees of small companies (International Foundation of Employee Benefit Plans, June 2000).

Data from the Bureau of Labor Statistics shows that total employer expenditures on tuition assistance in 1994 reflects this trend as well: per employee expenditures for tuition assistance was $30 in small companies (fewer than 100 employees) but $76 for companies employing more than 500. This problem is compounded by the wage differential: total hourly compensation (wages and benefits) in small companies averages just over $17, compared to almost $27 for workers in large companies (Bureau of Labor Statistics, March 2000). Workers in smaller companies have fewer financial resources to take on the responsibility of self-education and development. With over half of the entire U.S. workforce working for small companies (or part of the non-traditional workforce), tens of millions of workers are left to fend for themselves to keep their skills up-to-date in today's labor market.

CAEL (Council for Adult and Experiential Learning) is proposing Lifelong Learning Accounts (LiLAs) as one important solution to the problem of upgrading the capacities of the American workforce. LiLAs, as proposed in the attached briefing paper, are universal, portable, self-managed educational advancement accounts for adult workers funded by individuals, employers, and public sources. Using as their model the tuition assistance programs provided by the private sector, they are focused on filling the gap between a number of existing educational tax benefits available today that for one reason or another fall short of meeting our country's need to improve productivity. They offer employees lifelong learning opportunities and provide employers a continuously educated and trained pool of qualified workers in a changing economy.

This gap is particularly wide for employees of and small and mid-sized companies. The paper proposes up to a $500 tax credit for small and mid-sized employers who match their employees' LiLA contributions. In addition the proposal allows up to a $500 tax credit for the employers of low wage employees who are eligible for the Earned Income Tax Credit (EITC) to contribute to LiLAs without an employee match. EITC eligible taxpayers may deduct their contributions even though they do not qualify for itemized deductions.

LiLAs encourage employers to invest in their human capital and employees to develop their own intellectual capital. Why not adapt the model created by the private sector and make educational assistance available to all adults regardless of their workplace? Employers invest in their workforce because they know that it increases productivity and profits. As public policy, Lifelong Learning Accounts have the potential to increase the wealth of the nation and to give the current workforce a chance to access lifelong learning and turn it into higher lifetime earnings.

CAEL is a national non-profit organization focused on life-long learning in companies, educational institutions, and communities. It assists employers, colleges and universities, and adult learners. For more information, contact Amy Sherman at asherman@cael.org or 312.499.2635 or go to the CAEL web site: www.cael.org.