Academic and government research has highlighted the crucial importance of a skilled workforce to the nation’s economy. This research has also suggested that the training being provided to current and future workers may not be sufficient to ensure a workforce with the skills necessary for fostering economic growth and improved living standards.Partly in response to these concerns, over the last several years, the administration, the Congress, and the private sector have suggested or implemented several initiatives to enhance the provision and effectiveness of training. Some of these initiatives call for a greater role for employers in determining training needs or conducting training. Although many federal training programs focus mainly on the needs of particular types of worker populations (such as dislocated workers), other training programs focus on employers’ training needs. For example, in most states employers can take advantage of programs that provide funding for employment training as an integral part of the state’s economic development strategy. As of 1995, 47 states spent over $350 million for programs that helped employers develop customized formal training programs for their workers. The rationale for these state-funded programs is that worker retraining is critical to economic development. Most of these programs are funded from general state revenues; some states, however, require mandatory employer contributions to state training funds (similar to unemployment insurance payroll taxes). To be eligible for these state programs, employers often must meet financial or industry-specific requirements. To participate in these programs and receive funding for training, employers must prepare detailed training plans about the training they want to provide, be responsible for providing the training, and adhere to specific follow-up requirements. Employers may also fund their own training programs, individually, collectively, or in conjunction with unions, to train workers or new hires. Although a 1990 study estimated that employers spend billions each year on training activities, no comprehensive list exists of all privately funded training programs or how employers participate in them. Collaborations among employers and other entities—sometimes called consortia—are often developed mainly to provide member employers with trained workers at reasonable costs. Such consortia have historically existed in industries with technical trade or unionized occupations that have joined together for apprenticeship training. Apprenticeship training is a structured approach to formal training in which employers send their workers to classroom training while providing them with supplemental on-the-job training (OJT). Although not required, employers often register their programs with the U.S. Department of Labor’s Bureau of Apprenticeship and Training (BAT) to take advantage of various benefits. In 1995, Labor had about 34,000 registered apprenticeship programs with over 355,000 apprentices. Small employers have special training needs because of the workers they tend to employ, according to experts. Establishments of fewer than 100 workers employ over 50 percent of all workers, and, according to SBA, small employers provide the first work experience for two out of every three workers. Small employers also often hire workers with fewer skills and less education because they tend to pay lower wages than larger employers in their industries or geographic areas. Small employers are less likely to use available training programs and resources—especially federally sponsored training programs—than are larger employers, according to the extremely limited quantitative data available. For example, a recent employer establishment survey conducted by EQW found that 22 percent of work places with over 100 employees used government-sponsored training programs, while only about 12 percent of work places with fewer than 100 employees used them. A 1993 University of Kentucky survey also found that, while 44 percent of establishments with 500 or more employees used government training programs, only about 20 percent of those with 100 or fewer employees used them. An employer establishment survey conducted by BLS in 1994 found that although over 50 percent of establishments with 250 or more employees used apprenticeship programs, less than 18 percent of establishments with 50 or fewer employees used them. These data are supported by the views of many experts, who believe that the amount and quality of training being provided by small employers may not be sufficient to ensure a workforce with the skills necessary for fostering economic growth. No consensus exists, however, on the type or level of small employer participation appropriate to ensure that present and future workers of small employers are adequately skilled. In addition, several reasons may explain why small employers may not train or participate in available training programs. Finally, use of available training programs may be limited for employers of all sizes. Nonetheless, the significant difference between the use of available programs by small employers compared with larger ones raises questions about why small employers participate less in available training programs. Small employers may face several barriers when participating in available training programs. As shown in table 1, we categorized these barriers as economic, institutional, or informational. Appendixes II, III, and IV provide detailed information on the presence of these barriers in each of the programs we visited. Economic costs may affect small employers’ participation in training programs because small employers typically have fewer financial and human resources than larger employers, making training costs prohibitive. This lack of resources makes it more difficult for small employers to pay tuition costs or allow workers to take training during normal work hours because employers would have to absorb the cost of wages paid to workers who are training rather than working. In addition, because small employers are less likely to have staff devoted to training or personnel matters, it may be relatively more costly and time consuming for them to divert resources from production to completing administrative requirements for program participation. Finally, because turnover rates for small employers tend to be higher than for larger employers in the same industry and geographic area, small employers may be less willing or able to absorb the lost costs and benefits of training if the newly trained employee quits or is hired by another employer. Economic barriers to training were present to some degree in all the programs we visited—federal, state, and private. In the two EDWAA sites we visited, the costs associated with paperwork requirements somewhat discouraged employers from participating. For example, if an employer wants to provide OJT to a dislocated worker, the employer must, among other requirements, complete a detailed OJT training agreement, specifying what training is to be provided, its duration, the number of participants, wage rates to be paid, the rate of reimbursement, and a description of what participants will learn. The employer must also maintain and make time and attendance reports and other records available to program officials to support amounts reimbursed by the government under these contracts during the training period (which can last 6 months or longer). The employer also must allow program officials to inspect the program site to ensure that training is being done accurately. Officials at the program sites we visited said that because of the significant requirements, employers rarely provide OJT. State-funded training programs also had economic barriers that may discourage small employer participation. First, to participate in these programs, employers must comply with extensive paperwork requirements, providing detailed information about their operations, why they need training, and the parameters of the training. Then, they must develop a detailed training plan. Employers told us that, because of the amount of information required and the detailed nature of the information on the application, completing the application process is time consuming and burdensome. Program officials said the application process takes 5 to 6 months or possibly longer; one employer said it took over a year to complete the application process. In addition, to receive all of the requested funding throughout the training period (which can last up to 2 years) employers must meet with program staff and supply updated training information. Finally, when the training is completed, employers must provide information on its impact. The small employers we interviewed who were participating in the program said the monitoring requirements were also burdensome and time consuming. These employers participated despite the application and monitoring requirements because they recouped their costs when they received the training funds. However, they noted that other small employers may not be willing to endure the process to receive the training funds. Although state program officials said these requirements were mandated by the program legislation to ensure program accountability, they agreed that small employers may be discouraged by the amount of paperwork and information required. In addition, a few of the employers participating in one of these programs said that the program’s requirement that employers allow workers to receive training during normal work hours was difficult and sometimes costly. They said that employees did not always want to attend training during normal work hours and maintaining consistent productivity levels while employees were in training was difficult. Finally, one of the apprenticeship programs posed economic barriers to employers. Employers were hesitant to hire and train apprentices from the bricklayer apprenticeship program because they believed it was too costly. Officials overseeing this program said they often had difficulty placing all apprentices because employers said that, although apprentices received reduced wages during the training period, the reduced wages did not offset the apprentices’ lower productivity—a cost they could not afford. A broader economic concern facing employers in this apprenticeship program was the cyclical nature of the construction industry. They said that, even in the best of times, unionized journeymen sometimes cannot work all year because of weather or other factors and hiring apprentices when journeymen lack work would be unfair. One employer also told us it would not be fair to the apprentices to hire them and then lay them off soon after for lack of work. Other barriers limiting small employer participation in training programs are institutional, often resulting from a program’s organization or operations. Institutional barriers may limit small employer participation in programs because they may discourage or disqualify small employers from accessing the programs. For example, if a program targets its services primarily to workers rather than employers, it may discourage small employers because they do not have personnel dedicated to finding out about program procedures, which may be confusing or complicated. In addition, if a program limits its services to certain industries, locations, or training needs, employers of all sizes will not be able to take advantage of the program if they cannot fit into any of the targeted groups.