Copyright (c) The New Republic, Inc. 1986

April 14, 1986

SECTION: Vol. 194; Pg. 16

LENGTH: 1466 words

HEADLINE: Son of CETA: job training? No, corporate welfare

BYLINE: Bovard, JamesThe New Republic


THE job Training Partnership Act program, created in 1982, is one of President Reagan's proud accomplishments. Reagan frequently cites its 68 percent job placement rate for "economically disadvantaged" trainees as proof of the success of a public-private partnership. Former labor secretary Ray Donovan called JTPA "one of the greatest achievements in the history of government social policy," and current labor secretary Bill Brock calls it "a model for human resource programs." In fact, JTPA is a private-sector boondoggle tat uses taxpayer dollars to pay for routine business operating costs.

JTPA was created in 1982 to replace the Comprehensive Employment and Training Act. CETA was widely seen as a boondoggle, and almost everyone agreed that government training programs needed a face-lift. Reagan & Co. have done their best to portray JTPA as the antithesis of CETA. But the same people who ran CETA programs in many locales are now running JTPA, and msot of JTPA's subcontractors were previously employed by CETA. JTPA lacks CETA's make-work public service employment, but it has several novel absurdities of its own.

JTPA spends $ 3.5 billion a year on programs for the "economically disadvantaged," displaced workers, summer jobs for youths, and the Job Corps. The summer jobs program and Job Corps have remained basically unchanged since CETA's time, when conservatives ridiculed them for being ineffective and wasteful. Otherwise, JTPA is oriented more toward the private sector, with programs advised by and sometimes directed by local Private Industry Councils largely composed of businessmen. The PICs are free to establish job training programs as they see fit. The only need to meet standards set by the Department of Labor for job placements, average wages, cost per placement, and total expenditures on youth.

JTPA's current success statistics aren't worth of paper they are written on. The national 68 percent placements rate is concocted from 50 state measurements with no consistency or uniformity. JTPA's placement figures are "largely one-day-on-the-job" figures, according to Gary Walker, a New York consultant who has evaluated the program for the Ford Foundation and others. A 1979 General Accounting Office report found that 78 percent of those who got jobs through government training programs in Tidewater, Virginia, either quit or were fired within six months. Perhaps even more misleading, JTPA's placement rate refers only to "graduates." In some states, people who drop out of training programs are treated as if they never existed. This little sleight of hand--routinely used in previous government training programs--makes JTPA look significantly

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more successful than it is.

THE Reagan administration claims that JTPA serves primarily the hard-to-employ. But up to twice as many people are eligible for JTPA as were for CETA. JTPA's guidelines are so broad that over 42 million people have been eligible for government-subsidized training since October 1983. (Fewer than two million have signed up.) Under CETA, recruits had to be unemployed or underemployed. Un der JTPA, it is perfectly acceptable for someone to quit his current job and enter government-paid training for another one. Moreover, JTPA is serving a much lower percentage of high school dropouts (23 percent) than CETA did. Roughly a fifth of JTPAers have some college or post-high school education.

The average wage for JTPA hirees is $ 4.62 an hour--barely half the national average hourly wage of $ 8.64, and not exactly a banner achievement, since most JTPAers have high school degrees. If the college-trained and most capable recruits were left out of the average, the typical JTPA wage would probably be around four dollars an hour. Employers would have had to hire and possibly train people for these jobs regardless of JTPA. JTPA simply hires some low-income people for low-paying jobs instead of other low-income people who would have been hired without the program. Indeed, one government training expert noted that JTPA serves "the best of the economically disadvantaged." Cream-skimming--taking the most employable applicant, rather than the most needy--is pervasive. Walk er's study noted that in one area, the local PIC paid a local private job training school that "reportedly turned down 25 eligibles for every one accepted; in another, a bank teller program screened 118 JTPA eligibles to get 19 enrollees." JTPA, in short, is training only every trainees on college campuses. Since JTPA provides subsidies to employers who hire primarily the most able low-income people, needy, less-skilled job seekers may be worse off in the labor market than before JTPA was created.

JTPA primarily transfers the cost of job training from the private to the public sector. JTPA pays employers 50 percent of a worker's wages for six months if the employee is receiving on-the-job training. Little monitoring is done to ensure that business actually train the worker. The Private Industry Councils are encouraging businesses to use JTPA for their routine training expenses, and are proclaiming that participating companies have lowered their operating expenses.

In Cincinnati, JTPA is paying for in-house training program costs previously assumed by General Electric. In Spring Hill, Tennessee, JTPA will help pay training costs at General Motor's new Saturn plant. In New Jersey a Private Industry Council set up a special program, subsidized by JTPA, to train 40 youths to repair fast-food machines at McDonald's restaurants. It boasted that the program had a high placement rate, but McDonald's would have had to train people to fix the equipment anyway. The only difference was who was doing the training, and who was paying for it.

Where JTPA is not paying for training that would have occurred anyway, it often pays for training for jobs that don't exist. In the mining region of Minnesota, unemployment reaches 80 percent in some towns. With the decline of the American steel industry, demand for iron ore will remain depressed, and new industries are unlikely to enter the area. Yet JTPA is pouring in money to retrain the locals and help them search for nonexistent jobs. As a Labor Department study noted, "Relocation is part of the program that is not very

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popular among the [training] staff." Like agricultural subsidies that keep unsuccessful farmers on the farm, job training subsidies encourage people to stay in depressed areas with little or no hope of ever finding work.

Then there are JTPA's "employment-generating activities." The Private Industry Councils are using tax dollars to advertise and persuade businesses to relocate in their domain, and even to pay relocation costs in certain cases. Thus the federal government is giving the states money so thta they can lure industries away from each other.

The most dubious "employment-generating activity" is the use of JTPA as a routine slush fund by local companies trying to procure federal contracts. Illinois used JTPA funds to set up Procurement Outreach Centers around the state to help local business thought this program was so clever that it gave Illinois an award for the program. Federal tax dollars are being spent to pursue more federal tax dollars.

JTPA's youth programs are as bad as CETA's. Indiana Senator Dan Quayle, the chief author of the act, claims that "JTPA has a job placement rate . . . for the young people around 70 percent." But according to the Labor Department, less than 40 percent of JTPA youths get jobs--even for a single day. JTPA inflates its apparent success rate by mixing jobs placements and other "positive terminations"--includin g returning to school, and development of "youth competencies." The Private Industry Councils can count as "youth competencies" almost any activity that teenagers choose short of suicide. "Youth competencies" usually refers to "employability skills"--such as "world of work awareness," "making change" from a dollar, and demonstrating "effective non-verbal communication with others." This allows programs to measure their success by the number of certificates they hand out, rather than by the number of people who get jobs.

Even JTPA's pristine image is beginning to tarnish. The GAO reported in early 1984 that JTPA is vulnerable to the same kinds of fraud and abuse that destroyed CETA's credibility. Last June two staff members in Nevada were convicted for setting up a scam where employers hired nonexistent clients and split the wage subsidy with the Staffers. National Journal recently reported that a JTPA program in Chicago with 45 staffers placed only 41 people in jobs in the previous year. If Reagan is going to brag about JTPA, he had better hurry.