Congress revamps job training

Opportunity may be knocking in a big way for companies having difficulty finding skilled employees. U.S. business now has a fresh chance to mold federal job training programs into, if not a work of art, then at least a "workable ark." In many cities and counties, programs will be held in what will be known as the "One Stop" center. Private industry will occupy the majority of board seats for each center. So local companies will be steering the ark, up whose gangway will climb the disadvantaged and disabled, as in the past. However, for the first time, average Joes and Janes who in the past were not eligible for U.S. Department of Labor training programs will also be participating. "I am optimistic these changes are a step in the right direction," says Tom Lindsley, vice president of policy and government relations for the National Alliance of Business, an association of large companies who use the NAB to lobby on human resource and training issues. In the past, fewer than 100 One Stop centers existed around the country. DOL programs such as the Job Training Partnership Act were delivered through "Private Industry Councils." They were generally regional, run by states, and locked into training contracts with community colleges and private companies who were not held accountable. Only the disadvantaged qualified for the DOL training programs, and there were separate requirements states had to meet for numerous "socioeconomic strata" within that population identified as disadvantaged. The result was that local companies avoided the system like it were poison ivy. "In terms of working with public employment service agencies, many of our employers have found that the agencies were not able to refer to them candidates who meet their skill requirements. When companies asked for referrals, they were often not provided on a timely basis. Finally, when graduates of training programs entered a work force, there is often a painful discovery that the individuals have not acquired the skills that employees need to function there," says Daniel Berry, vice president for work force preparation, the Cleveland Growth Assn., which is the nation's largest Chamber of Commerce. One Stop centers and local companies will no longer have to worry about differentiating 163 training and vocational programs. States will get three block grants: for adult education, vocational education and job training. Each local work force investment area, corresponding to the boundaries of a city, county or metropolitan area, will decide how its portion of each of the three streams is spent. No longer will the localities have to spend a certain percentage of DOL money on each of numerous disadvantaged population groups. The Private Industry Councils of the past generally awarded large training contracts to a few providers, who may or may not have been sensitive to the particular economic trends and job needs in distant parts of the state. In the new system, the state will certify a long list of potential job training providers. This list can be expanded or contracted by the local work force development areas under certain conditions. When an individual comes in looking for work, he or she will be assigned a case manager. The case manager will help that person decide the kind of job for which he is best suited. The individual will then be given a "skill grant voucher" that he can take to any of the approved job training vendors. These training providers will have to meet performance standards, set by the state, in categories such as the number of trained workers who stay in jobs for six and 12 months and the wages received at six and 12 months. States will have to maintain data on these measures using existing quarterly wage records available through the unemployment insurance system. Only a few states do this now. The big question mark in all this is whether local companies will roll up their sleeves and become active in the local partnership councils that will run the local work force development areas. "If the One Stop centers are set up right, they will become 'the place where all the action is' on local economic development," says Lindsley. Tax credits, too Until now, a company that approached its Private Industry Council for help in filling a job essentially had to choose from a relatively narrow and somewhat less-than-sparkling employee pool. Typically, these individuals have fairly low skill levels, are poorly educated and have a sketchy work history. Although One Stop centers will now be able to train anyone, regardless of income, it is likely that the local work force development areas will spend most of their resources on getting the really down-and-out on their feet. If the One Stop centers work as devised, and these people are trained better and are more ready for work than in the past, then the federal tax incentives available for companies who hire them will look better than ever. The Work Opportunity Tax Credit (WOTC) is designed to encourage employers to hire low-income, disabled individuals. It provides for a reduction of as much as $2군 in federal income tax liability for each qualified worker. That is based on a 40% credit for the first $6ꯠ in wages, but only when the employee completes 400 hours of work. There is a 25% credit for employees who work between 120 to 400 hours. This has been a pretty popular tax credit, costing the Treasury Dept. about $450 million/yr, according to Lindsley. The only problem with the WOTC is that it expired on June 30. Congress is almost certain to extend it retroactively, as it has done repeatedly over the past few decades. While the WOTC has been around for generations, the Welfare-to-Work Tax Credit was established in 1997. Not only is it more recent than the WOTC, it is more generous, too. Companies who hire employees who had been on welfare for at least 18 months can claim a federal tax credit of up to $3귔 in that employee's first year and up to $5ꯠ for their second year. The formula is 35% of the first $10ꯠ wages in the first year, 50% in the second. Again, there is a 400 hour/yr work requirement. The welfare tax credit just went into effect on January 1, 1998. So there is no hard-and-fast data on whether employers are using it.