August 9 2013
Liberals love federal job training programs.
Oddly enough, it was a federal job training program that shoved me towards becoming a conservative.
Let me hasten to say that I had a real job: I was a reporter for a New Orleans weekly, and we wanted to investigate a job-training program called (I date myself) the Comprehensive Educational Training Act.
Covering CETA was a formative experience in my political development.
CETA was such a disaster that even liberals had to admit it. It was designed to provide work to the long-term unemployed and also summer jobs for students. Here is what I frequently saw when I (taking the bus) went to visit CETA places of employment: nobody.
The CETA workers I actually met were horribly offended when asked if they had plans to seek non-government-supported work. Along with being mugged—pace Irving Kristol, by a mugger rather than reality—covering CETA changed the way I thought.
I can’t find my stories on CETA but I managed to unearth this report. I vividly remember the community organization in this clip that wasted $615,000 on a clean-up project that never cleaned up anything. But the patronage opportunities for the “community leader” in charge of the program were, as I recall, substantial.
It was this story headlined “The Crony Capitalism of Job-Training Programs” that prompted my walk down CETA memory lane. The story is pegged to the news that Congress is considering reauthorizing the Workforce Investment Act (WIA). The law expired in 2003.
It’s no secret that too many would-be American workers lack the skills that make them employable.But federal job-training programs are ineffective at resolving the matter.
The authors of the piece write:
Crony capitalism is when private interests collude with government to acquire subsidies or economic benefits that give them an advantage in the marketplace. Many job-training programs, such as the "On the Job Training Program" (OJT), serve just this purpose.
In many cases, the OJT program provides subsidized job training for specific jobs in specific areas -- because the funds are limited, only certain employers will get the money. For example, in 2009, the OJT program provided a 50 percent salary subsidy to train chemical composite technicians for Renegade Materials in Dayton, Ohio. The company and workers both benefited from the program, but the subsidy provided Renegade with an advantage over its competitors, who did not benefit from free taxpayer money. …
Sometimes job-training subsidies help a range of firms in a particular industry, as was the case with the $22 million used to help lobstermen in the Northeast improve their businesses with government-funded business-plan training in 2010. These subsidies favor people currently in business over those who might want to enter the industry.
Okay, this is crony capitalism rather than using job-training programs to supply patronage opportunities for sympathetic political organizations. But it's the same idea.
In addition to cronyism, most federal job-training programs simply aren't effective. The story notes:
The money also doesn't work: The Government Accountability Office reported in 2011 that only five out of the 47 programs had completed an impact analysis up to that point, and each had found they'd had zero long-term effect on unemployment.
When will they ever learn?
But there is a potential solution to the crying need for job-training for the long-term unemployed:
The private sector provides alternatives. Internship programs are already in place at companies like BAE Systems at their New Hampshire locations and Ingalls Shipbuilding in Mississippi. Or, businesses could train workers in exchange for a commitment for the workers to remain with the company for a set number of years -- an approach used by companies such as Accenture and others for MBA reimbursement.
At a minimum, legislation renewing the WIA should include plans to eliminate the crony-capitalism elements that provide government benefits to narrow, private interests. These subsidies have no place in a free-market economy. Also, since many of the programs fail to target the areas with the most unemployment and are inefficient and wasteful, eliminating them completely and allowing private-sector alternatives to replace them would do a better job of increasing employment in the long term.