The six million Americans who have been jobless for half-a-year or longer are the intended beneficiaries of President Obama’s new jobs push this fall, according to reports. One program the White House is expected to plug is the Georgia Works initiative, where those not working collect unemployment benefits while training at local businesses in hopes of landing a real position:
The 44% of the unemployed who have been out of work for six months or more are of special concern. Economists fear their detachment from the workforce will prevent them from returning to work even after the economy recovers.
Under the Georgia Works program, workers continue to collect unemployment benefits, plus a small stipend to cover transportation and other expenses. After eight weeks of training, the company may hire the person, or not. It can amount to a free tryout.
The president called it a “smart program” at a town-hall meeting last week in Atkinson, Ill. “You’re essentially earning a salary and getting your foot in the door into that company,” he said.
The concept resembles welfare-to-work programs of the 1990s, where welfare recipients were encouraged and in some cases required to work in exchange for benefits.
Then, the economy was strong. Today, free training might offer little incentive to businesses that already have many well-qualified applicants and don’t necessarily see the need to add workers, said Lawrence Katz, a labor economist at Harvard University. He added that while Georgia Works appears to have had success, it hasn’t been rigorously evaluated by researchers.
“If we had more rapid job growth, this would be a very good way of getting employers to take extra chances on people,” said Mr. Katz. Still, he said the program could be successful depending on how it is designed.
Michael Thurmond, the former Georgia labor commissioner who created the program, claims 33 states have inquired into how it works.
“Employers are so risk-averse now, and because profit margins are so thin, the biggest mistake you can make is to make a bad hiring decision. This reduces the risk and lowers the cost of hiring new workers,” he said.
Jared Bernstein, former chief economist for Vice President Joe Biden and White House economic advisor, said on Tuesday the program could be good for the long-term unemployed, but wouldn’t move the needle on the poor jobs outlook.
“The biggest problem we have right now is job creation. This program doesn’t scratch that itch at all. It is surely the case that some of the long-term unemployed could benefit from retraining. But remember, if you provide someone with retraining and no job, they’re essentially all dressed up with nowhere to go.”
“A better idea would be a true wage subsidy. This is something that worked pretty well under the Recovery Act. Under Temporary Assistance For Needy Families (TANF), there was a really quite effective wage subsidy program where the Recovery Act paid a significant portion of workers’ wages but employers had to have some skin in the game. That’s important; under Georgia Works, employers don’t have to contribute anything to get folks at their worksites. It could easily be abused and it’s very important to prevent that. What you don’t want to do is provide essentially free labor that’s not under the rules of the Fair Labor Standards Act and, if done the wrong way, that could happen here. It’s got to have have some oversight.”
Copyright 2011 The National Memo