The Next L.A. / Reinventing Our Future : IDEA FILE: Worker Training

How It Works

In his 1992 presidential campaign, Bill Clinton called for a 1.5% tax on private employers’ payroll to finance a program of continuous, lifelong education for American workers. A similar effort could be implemented in California--but at only one-third the cost of Clinton’s plan. It would be financed by a state-imposed 0.5% payroll tax on private employers.

Benefits

Given the state’s estimate that private, non-farm payroll in California totaled about $306.5 billion in 1993, a 0.5% tax would raise more than $1.53 billion. By comparison, Gov. Pete Wilson’s proposed budget for the year beginning July 1 would lay out $18.8 billion for elementary and secondary education and community colleges and $4.6 billion for the Cal State and UC systems.

The money raised by the training tax would fund an infinite variety of training efforts. Technical workers could deepen their computer skills. Supervisors who speak only English could learn Spanish or Vietnamese, to better communicate with their employees. Workers displaced when their plant closes could obtain the skills they need to land new work. With most people expected to change jobs repeatedly in their working lives, nearly everyone ultimately would take advantage of the programs supported by the new tax. And hard-pressed colleges, adult schools and other training facilities would gain a steady new source of funding.

Short-Term or Long-Term Impact?

With support, the program could be implemented quickly. The payoffs would be both short- and long-term.

Supporters

Advocates argue that the need for training is immense. As workers get older, in almost any field, their skills need to be refreshed. Doctors and lawyers can jet to Aruba for continuing education courses--and then write off the costs on their tax returns--but most Californians lack access to affordable advanced education. Nationally, the Labor Department says more than 2 million Americans are permanently laid off each year. In the post-Cold War defense downsizing, the burden of job loss has landed disproportionately on California, which has the nation’s highest unemployment rate. Many workers whose jobs disappear will never again work in their old field. They need help identifying their aptitudes, building new skills and getting new jobs.

Opponents

Critics say piling a new cost onto California employers will cripple some--maybe drive some out of the state all together. Money that companies have to pay into a state retraining fund won’t get spent on new equipment or on hiring additional workers. The hit to the economy could be significant. In addition, government-funded job training has proved notoriously ineffective. The money too often is squandered by inept contractors who too often train the vulnerable unemployed for jobs that don’t really exist. So a big new spending program would require costly oversight provisions.

The Costs

Business would hurt the most, facing a new $1.53-billion tax bill. At worst, business would pass along every penny of the new tax. That would add 5 cents to the cost of every $100 worth of goods or services purchased. If the new training programs reduced unemployment, taxpayers would save. If they ended up damaging job creation in the economy, unemployment and its related costs would grow.

REALITY CHECK

Clinton stopped talking about his campaign plank the minute he got elected. The entire federal government now spends just $1.4 billion on re-employment. Wilson does not want to raise taxes to pay for rebuilding freeways destroyed in the recent earthquake. So this proposal may go nowhere. No.