Barack Obama recently proposed new programs to provide job training for youth and the long-term unemployed. For half a century, federal programs have provided trainees with little more than false hope. There is no reason to permit the feds to inflict new damage after all their previous failures.
Between 1962 and 1980, the feds spent more for federal job training and employment programs than the total cost of the Apollo program that reached the moon. But, unlike NASA’s, most Labor Department’s (DOL) rockets blew up on the launch pad. A 1979 Washington Post investigation concluded, “Incredibly, the government has kept no meaningful statistics on the effectiveness of these programs — making the past 15 years’ effort almost worthless in terms of learning what works.”
In 1962, Congress passed the Manpower Development and Training Act (MDTA) to provide training for workers who lost their jobs because of automation or other technological developments. Two years later, the General Accounting Office (GAO) revealed that any MDTA trainee who held a job for a single day was counted as “permanently employed” — the first of the DOL’s statistical charades. A 1967 poll by the Manpower Research Council found that 80 percent of the members of the American Society for Personnel Administration felt that “the federal government’s manpower and training administration has not helped them find qualified employees; and the largest percent of this group said this was because training was given in the wrong skills.” In 1972, the GAO reported that the MDTA was failing to teach valuable job skills or place trainees in private jobs.
Congress responded in 1973 by enacting the Comprehensive Employment and Training Act (CETA). In the preface to the new law, Congress conceded that “it has been impossible to develop rational priorities” in job training.
CETA was more “rational” because it spent vastly more money, especially on job creation. It paid to build an artificial rock for rock climbers to play on, provided nude sculpture classes where aspiring artists pawed each other, and conducted door-to-door food-stamp recruiting campaigns. At one point, it was paying 10,000 “artists.” One CETA-funded poetry project proudly announced, “Love is like a squished banana.”
Perhaps worse than wasting the public’s money, CETA squandered part of the lives of its participants. A study by SRI, a Labor Department contractor, concluded that “participation in CETA results in significantly lower post-program earnings” and that “all program activities have negative effects for men.” A study by the Urban Institute concluded that CETA produced “significant earnings losses for young men of all races and no significant effects for young women.” Studies by the Policy Research Group and the Center for Employment and Income Studies concluded that CETA had “negative overall effects” on employment. That should not have been a surprise, since CETA hirees were generally assigned to do whatever benefited the organization that put them on the payroll, with no concern for the trainees’ development.
After CETA became a laughingstock, Congress replaced it in 1982 with the Job Training Partnership Act (JTPA). As a Congressional Quarterly study noted, “By wiping the slate clean … changing the law’s name and modifying its governance structure — JTPA provided a new lease on life for federal job training strategies.” The JTPA spent lavishly to teach Washington taxi drivers to smile, provide foreign junkets for state and local politicians, and bankroll business relocations.
The JTPA provided lavish subsidies to encourage state and localities to bribe businesses to relocate to their area. What was intended to be a job-training program had turned into a massive relocation scam. An Eastern Oklahoma Private Industry Council (PIC) official, Pat Boyd, claimed in the PIC’s newsletter that “any time you can entice a large corporation to relocate you’re helping everybody.” University of Chicago professor Gary Orfield observed, “The federal government has created a heavy subsidy for businesses to fire people in one place and hire them in another place.”
JTPA money was burnt up in the pursuit of other federal subsidies. JobWorks, the JTPA administrator in Fort Wayne, Indiana, paid a consultant $86,000 a year to help businesses win federal contracts. Scores of PICs set up federal contract-procurement centers. JTPA funds were also often used to assist businessmen in snaring Small Business Administration loans.
The GAO and the Labor Department inspector general perennially criticized the Labor Department for vastly exaggerating the percentage of JTPA trainees who got jobs. And the vast majority of JTPA grads who got hired were not employed in the occupation for which they were trained. The job most frequently obtained by JTPAers was that of janitor. JTPA trainees were almost 10 times more likely to be unemployed than other Americans a few months after their training ended. A Northwestern University study found that JTPA graduates had an extremely high rate of being fired for absenteeism, tardiness, poor productivity, poor attitude, stealing, and substance abuse.
But the JTPA was a huge success in boosting the number of government-aid recipients. Young trainees were twice as likely to collect food stamps after JTPA involvement than before, since the “training” often included instructions on applying for an array of government benefits. I saw that firsthand in 1989, when I attended an opening-day session for new JTPA trainees in Frederick, Maryland. A long parade of representatives from government social-service programs urged trainees to apply for their benefits. (I was writing an article on the JTPA for Reader’s Digest at the time.)
In 1993, a DOL-financed study revealed that JTPA participation “actually reduced the earnings of male out-of-school youths.” Young men enrolled in JTPA programs had 10 percent lower earnings than a control group that never participated.
Replacing the JTPA
In 1998, Congress finally mothballed the JTPA and replaced it with the Workforce Investment Act (WIA). Congress required the DOL to complete a thorough evaluation of the WIA’s effect on trainees by 2005. DOL bureaucrats never let that provision of the law disturb their repose. At last report, the DOL is promising that the key WIA study will be completed by 2015 — only a decade late. House Republicans are refusing to reauthorize the WIA, which is repeating many of the mistakes of prior federal programs.
Thirty-two years ago, the GAO noted that “the Federal Government has been very responsive to employment and training problems but tends to respond to such problems by creating separate programs.” Earlier this year, the GAO reported that there were 47 different federal-employment and -training programs, costing taxpayers $18 billion a year. There is massive overlap and duplication, and few programs seriously evaluate their effect on trainees.
Obama proposed a new program to permit businesses to bring in the unemployed for a tryout for a few weeks or months at no expense to the business. (The person’s “salary” would be the unemployment compensation he continued to receive.) The JTPA had a similar provision that paid employers 50 percent of a worker’s wages for a maximum of six months if the company claimed to be training him. The JTPA contractor for Cook County, Illinois, sent replica “blank checks” to employers, telling them to fill in the blanks for how much money they wanted to collect from federal training programs. Little or no monitoring was done to ensure that businesses actually trained workers. And it didn’t matter if the person had already been trained by that company or by some other employer: the company could still stuff its coffers with JTPA funds. Many companies fired the workers as soon as the wage subsidy ended.
The harm federal programs do
Bureaucracies don’t learn from their mistakes because they don’t pay for their failures. Government training has always been driven more by bureaucratic convenience than by market necessities. The same defect permeates public-sector efforts. Education Secretary Arne Duncan recently told National Journal that “too many schools today are still preparing students for jobs from 40 to 50 years ago.”
The fallacy underlying federal training programs is that businesses lack an incentive to train their employees. That is like assuming that farmers don’t have an incentive to buy seed, or that auto manufacturers lack incentives to seek out parts suppliers. There is no substitute for a robust economy to create vast numbers of new private jobs. Nothing Obama proposes regarding job training can outweigh the damage his policies have already inflicted on the economy.
Many, if not most, of the participants in federal jobs and job-training programs would be better off today if the programs had never existed. Aside from wasting scores of billions of dollars, government manpower programs distorted people’s lives and careers by making false promises, leading them to believe that a year or two in this or that program was the key to the future. People spent valuable time in positions that gave them nothing more than a paycheck or a certificate, while they could have been developing real skills in private jobs with a future.
As long as Labor Department staffers collect their pensions, it doesn’t matter how many generations of Americans are harmed by their federal training programs. But bad training is worse than no training at all. If federal job-training efforts worked, Congress would not throw out existing programs every decade or so and start all over again. America can no longer afford “no-fault pseudo-benevolence.”
This article originally appeared in the December 2011 edition of Freedom Daily.