Experts Question Benefits of Quayle’s Jobs Program

From now until Nov. 8 voters are likely to hear often about the Job Training Partnership Act (JTPA), a relatively obscure 5-year-old federal program that spends $3.2 billion annually attempting to train unskilled and laid off workers.

The reason: the co-creator of the program is Republican vice presidential candidate Dan Quayle, who joined in an unusual Senate alliance with Sen. Edward M. Kennedy (D-Mass.) in 1982 to get the program enacted. Quayle touts JTPA as his major legislative accomplishment. Last week, Republican presidential nominee George Bush said that JTPA puts Quayle on “the leading edge” in job development.

In a recent speech, Quayle asserted that the program had “trained 3.4 million disadvantaged workers.” But it is far from clear what or how much the program has achieved, according to several job training experts and a January, 1988, report by the Labor Department’s Office of Inspector General.

The study found that:

--The program’s “rates of retaining participants in jobs, increasing their earnings and reducing welfare dependency are not encouraging.”

--Almost half of the participants end up unemployed four months after training ends.

--JTPA “is not targeting hard-to-serve individuals.” Rather, it is targeting participants who are easy to place. Sixty percent of those placed are high school graduates.

--About 60% of the workers who received training would have been hired without it, according to employers interviewed by the Labor Department.

Findings such as these have prompted critics, such as Indiana University associate professor Mark Crouch, to call the program “corporate welfare.”

To be sure, JTPA has its champions, prime among them Robert T. Jones, assistant secretary of labor for employment and training. “I think the program is clearly succeeding,” he said in a telephone interview. “We have moved from 30-40% placement under CETA to 60-70% under JTPA.”

The Job Training Partnership Act was enacted in 1982 as a replacement for the frequently criticized Comprehensive Employment and Training Act (CETA). The CETA program, at its peak, spent $9 billion annually, training many people who were ultimately put in short-term government jobs or “make-work” projects without lasting benefits to the recipients. The program also was scandal-ridden.

By contrast, JTPA was designed to train people for jobs in the private sector. The federal government dispenses funds to each of the 50 states, based on a formula incorporating the state’s population and its unemployment rate, among other factors. Tremendous leeway is given to state and local governments on what sort of training will be provided in their area and who will get the training.

Local Industry Councils

The basic structure of the program is centered on local private industry councils (PIC), at least a majority of whose members come from business. Education, labor and community organizations also are supposed to be represented. There are 17 such councils, for example, in Indiana.

Each council hires its own administrative entity--usually a nonprofit organization--to certify potential trainees and assist in picking companies that will employ them. The council ultimately decides which companies are approved. Up to half of the employee’s wages are subsidized by the government for the first six months and up to a quarter of the wages can be subsidized for the next thirteen weeks.

Ironically, the program has generated a good deal of controversy in Quayle’s home state of Indiana. The charges range from lax administrative controls to helping big corporations that don’t need subsidized job training, from awarding contracts to companies affiliated with PIC members to firing workers when the subsidized employment period ends.

“Indiana presents a good case study of the problems with JTPA,” said Crouch, a Democrat and a Quayle foe who has been a longtime critic of the program.

Although Quayle has nothing to do with the day-to-day operations of JTPA, he has kept an active interest in the program in his state, his aides say. He has held hearings in several Indiana cities on the program. Some supporters here refer to him as “the patron saint of JTPA.”

Indiana is hardly the only place where there is controversy. A federal investigation of the way Democratic Gov. Richard F. Celeste of Ohio dispensed JTPA money is currently underway. And last March, Mayor Tom Bradley replaced virtually the entire board that dispenses $42 million in JTPA money in Los Angeles yearly after revelations in The Times of several scandals.

Kennedy Critical

Kennedy has said on numerous occasions that problems have arisen in JTPA’s implementation. Specifically, he has charged that the program has encouraged “creaming,” a process in which only the most easily employable are chosen for training. He has proposed a new bill that would provide incentives for the training and placement of long-term welfare recipients. The bill has passed the Senate and is pending in the House.

Quayle voted in favor of Kennedy’s bill. However he feels that the program “has been an overwhelming success,” according to his Senate press secretary, Jeff Nesbitt. He said that Quayle’s response to criticisms of the program was that the problems “are confined to localities involving the local disbursement of funds--not something the federal government would have control of. He believes the federal government should give states the freedom to run these kinds of programs and allow localities to disburse funds as they see fit.”

To date, Indiana has received more than $250 million in JTPA funds, according to state officials. Thomas P. Miller, the state’s director of economic development, said “I think the JTPA has been very successful in Indiana. It has brought together the public and the private sector.” He said all 17 Indiana private industry councils had met or exceeded federal standards for placements and other performance measures. And he said that there has been “no major waste or abuse.”

But there have been brouhahas about grant recipients--large and small--and a host of other issues.

One of the major current controversies involves a new Subaru/Isuzu plant that is supposed to start building trucks next fall. The companies decided to locate near the west Indiana city of Lafayette after major efforts by Gov. Robert D. Orr, Lt. Gov. John Mutz and other state officials, who had been unsuccessful in several previous attempts to land one of the Japanese auto company “transplants.” Indiana offered an $86-million incentive package, including tax abatements, new roads and training grants, including more than $1 million in JTPA funds. The project is supposed to provide 1,700 new jobs immediately and 3,200 ultimately.

‘Significant Barriers’

Several officials of job training programs in surrounding counties are disturbed that they are losing money as a result of the grants to Subaru/Isuzu. The people who will lose out on training as a consequence are “probably those that have the hardest go of it, those who are illiterate, those who have significant barriers to entering the job market,” said Mindy Young, director of marketing for Educational Development Systems, a Frankfort, Ind., company that has trained people under JTPA contracts. On the other hand, she said, Subaru will be hiring “the most employable people.”

Among the other Indiana controversies:

--The “retraining” of some veteran supermarket workers in Tell City and machinists in Terre Haute to do essentially the same work for different employers.

--The expenditure of $5,000 of JTPA funds in Peru, Ind., to help start a “circus museum” (Peru used to be the winter home of Ringling Bros.) on the rationale that it would generate tourism and therefore lead to “job creation.”

--The salary of Karen K. Tyler, executive director of the South Central Private Industry Council. Tyler is the president of Regional Growth Enterprises (RGE), an Indianapolis-based company that has had a contract to run the South Central PIC since 1983. RGE has been a for-profit company since 1986. Tyler said her salary was $35,000 to 50,000 a year. But according to state records, she was paid more than $70,000 last year, $48,500 in the first quarter of 1988 and $115,000 in the second quarter of 1988. Roger D. Semerad, who was the undersecretary of labor for employment and training until last December, said such a salary was “truly extraordinary . . . that takes my breath away.”

--Allocation of $785,000 in JTPA funds to a new U.S.-Japanese joint venture company in Madison called Arvin-Sango which will make auto exhaust systems for U.S.-based Japanese-owned auto companies. At the same time Arvin Industries, one of the companies in the joint venture, is closing down a factory and laying off 500 workers in Franklin, 65 miles northwest, after unionized workers there voted against granting management a $3-an-hour cut in wages and benefits. A job training agency has been awarded $525,000, including $350,000 of JTPA funds, to retrain those employees and others Arvin is laying off in the area, who do similar work to that which will be done in Madison.

‘Negative Sum’

Franklin Mayor Ed Teets has said he thinks it makes no sense to provide financial assistance to a company for expansion while the company is shutting down other operations in the state. Situations like this indicate that JTPA in some instances “is a negative sum game,” said Gary Orfield, a University of Chicago political scientist, who has studied the program in depth.

To JTPA cheerleaders--ranging from Indiana officials to the National Alliance of Business--one of the program’s bright lights is the Northeast Indiana Private Industry Council, the policy-setting organization for JTPA programs in eight counties including Allen, where Ft. Wayne is the county seat, and Huntington, Quayle’s home county.

Steve Corona, the president of JobWorks, the nonprofit organization that dispenses training money for the Northeast Indiana PIC, said “our program is doing real well.” Corona points to the fact that the PIC has exceeded all the standards for job placement and cost per placement.

He expressed pride at placing experienced, dislocated workers in “good jobs” at large companies like General Motors, as well as placing entry level workers in lesser jobs. For the year ended June 30, the average starting salary of persons placed by JobWorks was $5.15, up from $4.85 in 1986 and $5.05 in 1984.

Corona and others also touted the unit’s accomplishments in economic development. He said that 20 corporations had moved into the area, specifically in response to a big advertising campaign in national magazines touting the virtues of northeast Indiana, leading to the creation of 1,274 jobs and new investment of $140 million.

Aircraft Engines

Among those companies is General Electric, which relocated about 800 aircraft engine-making jobs from Evandale, Ohio, to Ft. Wayne at the end of 1983. GE got $2.5 million of JTPA funds for on-the-job training for 522 workers, Corona said, the largest single contract the Northeast Indiana PIC has entered into. The state of Indiana also offered GE other inducements, making the total incentive package $4.1 million.

Corona said Indiana was fortunate to have gotten GE since Tampa, Fla., was in the running for the factory and wages there would have been $3 an hour less. But Crouch, the associate director of labor studies at Indiana University-Ft. Wayne, asserted that this was simply another example of “job rotation,” not “job creation.” He also noted that at the same time GE’s aircraft engine division moved, the company’s electric motor plant closed down in Ft. Wayne and moved 550 jobs to Kentucky, Tennessee and Mexico.

He and other critics also raised questions about grants awarded to other businesses near here. Crouch said that one of the training grant recipients was the LaFontaine Golf Club in Huntington, 25 miles from here, coincidentally where Quayle played his high school matches.

Until a month ago, Norman Stoffel’s family owned the course. Stoffel said he could not recall what the JTPA worker did at LaFontaine in 1984. Stoffel said the worker must have been there for only a short time and expressed bewilderment at what the person would have been trained for. “Would he be the pro?” Stoffel asked. “I was the pro,” he said, answering his question with a laugh.

One of the most consistent criticisms of JTPA is that it subsidizes companies that hire workers for low wages and then let them go after the subsidy period ends. In northeast Indiana, that charge has been levelled at Lyall Electric Co., of Kendalville. The company makes wiring harnesses, primarily for the appliance and furniture industries, according to George Wappes, the company’s human resources director, who also is a member of the Northeast Indiana PIC.

Lyall has received $415,000 in JTPA subsidies for 350 people, according to Corona. For a large percentage of those workers, hired between 1984 and 1986, the average wage was $3.99 an hour. The turnover rate was 35%, about average for the company, Wappes said. At one point nearly 20% of the company’s employees were JTPA-certified.

Following Recession

Corona acknowledged that the wages were low but said many of the people took the jobs when the Indiana economy was still quite depressed, coming off the severe 1982 recession, and other jobs weren’t available. He said Lyall’s participation in the program had diminished substantially since wage rates and job availability in the state increased.

In 1985 and 1986, Chester E. Dekko, Lyall’s president, contributed $1,900 to Quayle’s reelection campaign. “I’ve been a contributor to Quayle” since he first ran for Congress, Dekko said.

However, unlike his assistant, Wappes, Dekko expressed reservations about JTPA: “I’m a free enterpriser; I don’t think government should be involved with helping business. It’s a way of subsidizing industry. It’s discriminatory . . .. But they set up the ground rules. You have to play the game. It’s a way of retrieving some of your tax dollars.”