This is a guest post by Robert Maxim, research associate, competitiveness and foreign policy, for the Council on Foreign Relations studies program.
Any bill that receives the support of both Ted Cruz and Harry Reid is notable in its own right. When that bill takes steps to streamline the complex web of U.S. worker training programs, it is a genuine achievement for a Congress that gridlocks on even the most mundane tasks. In late June the Workforce Innovation and Opportunity Act (WIOA), the most notable reform of worker training since the Clinton Administration, passed 95-3 in the Senate. Yesterday WIOA passed 415-6 in the House. But while this bipartisan, bicameral bill implements some common-sense changes, it is only a modest update rather than the more ambitious overhaul that is needed.
Worker training has been in the spotlight since a 2011 Government Accountability Office report identified forty seven separate employment and training programs across nine federal agencies, and found overlap and duplication of efforts across many of the programs. Additionally, it noted that the government was doing little to measure program effectiveness. There was no real effort to determine whether a participant getting hired or receiving a wage increase was actually attributable to the resources or training that he had received. The report has been frequently cited by policymakers, and was a talking point for Republican presidential candidate Mitt Romney on the 2012 campaign trail.
The last major update to worker training was in 1998, when the economy was booming and unemployment was around four percent and dropping. The Workforce Investment Act of 1998 (WIA) implemented a work-first model—the goal was to get people into jobs quickly, and leave training to those who absolutely needed it. The 1998 law created three major programs, one for any adult who was seeking employment services or training, one for displaced workers who had lost their job through no fault of their own, and a youth program for workers under the age of 21. The programs for adults and displaced workers implemented a triage-like system, offering core and intensive services, and then training as a last resort. Core services included basic job search assistance and skill assessments. Intensive services included individual counseling and case management. In order to be eligible for training, a worker needed to complete core and intensive services without finding a new job. As a result, only ten to fifteen percent of workers in a given year received training. The 1998 law also created a system of One-Stop Career Centers, where workers could go to identify which program would be the best fit. These centers coordinated the adult, displaced worker, and youth programs, as well as many smaller programs aimed at specific groups of workers such as Native Americans or veterans.
While this work-first model operated well during the strong economy of the late 1990s, it was much less effective during the late-2000s downturn. Since 2008 unemployment has skyrocketed, and while the overall unemployment rate has since begun to come down, long-term unemployment has remained near historically high levels. This has fueled discussions of a “skills gap” that could be holding back workers from open jobs, which in turn created the impetus to reform workforce development.
Both houses of Congress and the president had their own vision for how to reform worker training. In March of 2013 the House of Representatives passed the Supporting Knowledge and Investing in Lifelong Skills Act (or the SKILLS Act). This bill would have repealed twenty four federal worker training programs, including the three major programs created by the 1998 law, and replaced them with a single block grant allocated to states for workforce development. The SKILLS Act provided governors with wider discretion on how to use the block grant money. It also eliminated the “triage” model by combining core and intensive services, and providing flexibility for workers to bypass these services and enroll directly in training.
After the House passed the SKILLS Act, the Senate, led by Senators Patty Murray (D-WA) and Johnny Isakson (R-GA), made the decision to abandon their own worker training overhaul and instead amend the SKILLS Act to include Senate priorities. The compromise bill, renamed the Workforce Innovation and Opportunity Act, maintains the current adult, displaced workers, and youth programs, but eliminates fifteen smaller programs. It keeps the SKILLS Act’s streamlined path to direct enrollment in training. The bill also puts an increased emphasis on partnerships with businesses, reimbursing eligible employers for up to seventy five percent of the costs to train workers. Finally, the bill strengthens evaluation and data reporting requirements by standardizing them across programs.
This new bill is a positive development, if for no other reason than it shows that Congress is still capable of compromising on important issues. When discussing it, lawmakers frequently cautioned against “letting the perfect be the enemy of the good.” If Congress took the same philosophy on issues like immigration or entitlement reform then the country would be on a much better track right now.
Still, the bill is unlikely to do much to bring down long-term unemployment, or encourage a critical mass of companies to increase on-the-job training. Countries such as Germany and Denmark, which have very effective worker training programs, spend ten to twenty times as much as the U.S. on workforce development relative to the size of their economies. In comparison, even this encouraging step by Congress is a pretty small one.
This piece is cross-posted from CFR.org with permission.