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
BODY: SON OF CETA
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
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
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
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.