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Jobs Bill Ojt Brief
Jobs Bill Ojt Brief
On-the-Job Training
Recommendations for Inclusion in a Federal Jobs Bill
1730 Rhode Island Avenue NW Suite 712 Washington DC 20036 202.223.8991 info@nationalskillscoalition.org www.nationalskillscoalition.org
On-the-Job Training
Recommendations for Inclusion in a Federal Jobs Bill
January 2010
Introduction
Nearly27millionU.S.workerswereeitherunemployedorunderemployedasofDecember2009, 1 andbyoneestimateemploymentneedstoincreasebymorethan580,000jobseverymonth betweennowandNovember2011justtoreturntoprerecessionlevels.2 Congressandthe Obamaadministrationhavebeenexploringarangeofpolicyproposalstostimulatejobgrowth andputAmericabacktowork,andlatelastyeartheHouseofRepresentativespassedtheJobs forMainStreetAct(H.R.2847),whichincludesnewinvestmentsinhighwaysandother infrastructure,fundstostatestopreservepublicsafetyandeducationjobs,andextendedbenefits forunemployedworkers.TheSenateisexpectedtoconsideritsownjobsbillintheearly2010, whichmayincludesuchotherpoliciesasinvestmentsinenergyefficiencyandothergreen technologies,andhiringtaxcreditsforbusinesses. Whileinvestmentsinjobcreationaresorelyneeded,thereisariskthatanygainsinemployment willbeshortlivedunlessworkershavetheskillstheyneedtotakeadvantageofnewjob opportunities,andemployerscanfindtheskilledworkforcetheyneedtogrowandcompete. Manyofthejobscreatedinsectorssuchascleanenergy,healthcare,andconstructionwillbe middleskilljobs,requiringsignificanteducationandtrainingbeyondthehighschoollevel, thoughnotnecessarilyafouryearcollegedegree.Workersmustbeabletoquicklyacquirethe skillstofillthesejobs,andtoaccessongoingeducationsotheycanturnthosejobsintocareers. Theneedfortrainingisespeciallyacuteforworkerswhowouldbenefitthemostfromajobsbill: dislocatedworkerstransitioningtonewindustries,longtermunemployedindividualsupdating theirskillstocatchupwithemergingtechnologies,andlowincomeandentrylevelworkers seekingtostarttheircareersintheworsteconomicclimateinseventyyears. Thereisalreadyevidencethatskillsshortagesarestiflingjobgrowth:arecentBusiness Roundtablereportindicatesthatdespitehighunemploymentrates,morethan60percentof businessesareexperiencingdifficultyfindingqualifiedapplicantsforcurrentjobopenings. 3 FederalinvestmentsundertheAmericanRecoveryandReinvestmentActandotherlegislation areprojectedtocreatemillionsofadditionaljobs,butemployerscannotreadilyexpandunless theycanfindworkerswiththeskillstoperformthesejobssafelyandeffectively.
1 2
ofoverallresourcesWIAfundingdeclinedbyapproximately30percentininflationadjusted termsbetween20012008andalsoduetofederalandlocalrestrictionsonthetypesofworkers thatmaybeserved,theallowabledurationoftrainingprograms,andemployerreimbursement rates. The Pennsylvania Survey SeekingtogaugeemployersinterestsinOJT,thePennsylvaniaDepartmentofLabor&Industry conductedasurveyinDecember2009January2010,targetingbusinessesparticipatinginthe statesIndustryPartnershipprogram.Morethan250companiesrespondedtothesurvey, varyingwidelyinsizefromsmallbusinessesemploying09employees(16percentof respondents)tolargebusinessesemployingmorethan250employees(26percentof respondents).Abroadrangeofindustrieswererepresentedinthesurvey,including manufacturing(approximately42percent),construction(11percent),andbusinessandfinancial services(about8percent).Employerswereaskedaseriesofquestionsregardingtheirnearterm hiringexpectationsandtheimpactontheirhiringpatternsofawagesubsidytocovertheexpense ofprovidingonthejobtrainingtonewhires. Nearlyhalfofallrespondents indicatedtheydefinitelywould behiringnewemployeeswithin thenextsixmonths,while another30percentindicatedthat theywereconsideringnew hires.Inaddition,morethan40 percentrepliedthattheywere eitherdefinitelyorpotentially planningtorecallworkersthat werelaidoffduringthe economicdownturn.Giventhat Pennsylvaniasunemployment ratehasnearlydoubledsincethe startoftherecentrecessionin December2007,thefactthata significantmajorityof employersarecontemplating addingemployeesrepresents encouragingnewsabouttheimpactoffederaleffortssuchastheRecoveryAct,andtheprospects forpositivejobgrowthin2010.Atthesametime,thesurveymakesclearthatpolicieslikeOJT canacceleratethatgrowth,puttingmorepeoplebacktoworkmorequickly. Respondentswereaskedwhethertheywouldbemoreinclinedtohireorrecallworkersifthey receiveda5075percentwagesubsidytoprovideuptoeightweeksofOJT.Nearly80percent ofrespondentsrepliedyesormaybe,clearlydemonstratingthatbusinesseswouldutilize
anOJTprogramifitwerewidelyavailable.ThesesurveyfindingssuggestthataformalOJT programmayenablebusinesstocreatejobsearlierinthebusinesscycle,therebyincreasing productivitysoonerandjumpstartingmorehiring.Byoffsettingforemployerssomeofthe expenseandriskoftraininganewhire,OJTcanbeaneffectivetooltoincentivizehiringthat wouldnototherwiseoccurorthatwouldoccurmuchlessrapidlyintheabsenceofsucha program. However,merelyofferingtheemployeranOJTsubsidyisnotsufficienttoensurethatworkers benefitoverthelongterm.AnyOJTsubsidiesshould: betargetedtowardsqualityjobsthatwillcontinuetoexistaftercompletionofanOJT program; supportjobsthatofferwagesandbenefitsatthesameratereceivedbyotheremployees performingthesameorsubstantiallysimilarwork;and leadtomeaningfultrainingandcareerdevelopmentopportunitiesfortargetedworkers.
ThePennsylvaniasurveyoffers somepromisingresultsinthis area,aswell:nearly75percent ofrespondentsindicatedthat theywouldnotbelesslikelyto participateinaprogramthat requiredagoodfaitheffortto retainworkershiredunderan OJTsubsidyforatleasttwelve weeksfollowingtheOJTperiod, andmorethan70percentstated thattheywouldnotbeless likelytoparticipateifrequired topaytheseworkersatthesame rateassimilarlysituated employees.Whencoupledwith recentDOLdataonemployee retentionunderOJT,these resultssuggestthatawell designedOJTprogramwith meaningfulworkerprotections wouldlikelyenjoysupportfrom abroadrangeofemployers,andcouldleadtolastingjobandcareeropportunitiesfortargeted workers.
Policy Recommendations CongressshouldprovidededicatedfundingtosupportexpandedOJTactivitiesaspartofany jobsbill,andshould: CreateLocalFlexibilityinSettingEmployerReimbursementRates.Manysmalland mediumsizedbusinesseslacktheresourcesandinfrastructuretosupportinternaltraining programs;asaresult,manystateshaverequestedwaiverstoallowforreimbursement ratesforsuchbusinessesabovethecurrent50percentcap.Pennsylvania,Louisiana,and Marylandrequestedwaiversin2009thatwouldallowthemtoprovideupto90percent reimbursementforemployerswithfewerthan50employees,andupto75percentfor employerswithbetween50and100employees.Atleastadozenotherstatesrequested similarwaivers(seeAppendixAforcompletelist).CongressshouldprovidelocalWIBs withtheflexibilitytosethigherreimbursementratesaccordingtocompanysizeorother localfactors. EliminateSequenceofServiceRequirements.UnderWIA,workersmustestablishthat theyareunabletoobtainemploymentthroughasequenceofcoreandintensive servicesbeforeaccessingtrainingservices.Thiscanleadtosubstantialdelaysbefore workerscanbeplacedinOJT,limitingprogrameffectivenessforemployersreadytohire. CongressshouldsuspendthissequenceofservicerequirementforOJTparticipants. PrioritizeQualityJobs.WhileOJTcontainsanumberofworkerprotections,morecanbe donetoensurethebroadestpossiblerangeofworkersbenefitfromOJTexpansion. CongressshouldrequirelocalWIBstoprioritizeOJTcontractswithemployerswhoagree toretainparticipantsforasignificanttimeperiodbeyondcompletionoftheprogram;pay wagesabovethelocalindustryaverage,andprovidehealthandotherbenefits;andoffer OJTopportunitiestolowincome,minority,andotherdisadvantagedpopulations. EaseSelfSufficiencyRequirementsforEmployedWorkers.WIAlimitsOJTcontractsfor skillupgradetrainingforincumbentworkerstothosewhoarenotearningaself sufficiencywage.Althoughintendedtoensurescarcetrainingresourcesaredirected towardlowskilled,lowincomeworkers,thisprovisionpotentiallylimitstheuseofWIA dollarsinconjunctionwithlayoffaversioninitiativeswherejobtrainingcouldallow impactedworkerstoupgradeskillstoretainfamilysupportingemployment.Congress shouldrelaxtheselfsufficiencyrequirementforemployedworkersifOJTisofferedaspart ofalayoffaversionstrategy,andclarifythatrestrictionsontheuseofWIAfundsforthe trainingofincumbentworkersdonotapplyinsuchcircumstances. RemoveLocalTimeLimitsonOJTPrograms.WhileWIAcontainsnospecifictimelimit onOJT,atleastsomelocalWIBsrestrictOJTcontractstoshorttermtrainingofsixmonths orless.ThislimitstheuseofOJTfundstosupportthedevelopmentoflongertermcareer laddermodelsthatcombineworkexperienceandperiodictrainingtoadvanceworkersto higherskillpositions.Congressshouldencouragelocalareastoremoveanyrestrictions thatwouldlimittheabilityofemployersandtrainingproviderstoofferlongerterm trainingthroughmultipleoccupationallevels.
National Skills Coalition: 1730 Rhode Island Avenue NW, Suite 712, Washington DC 20036 | 202.223.8991 | www.nationalskillscoalition.org
Up to 50% for incumbent worker programs http://staging.okcommerce.gov/test1/dmdocuments/State_Plan_Modification_2905092863.doc Up to 20% for incumbent worker training Up to 50% for statewide activities http://www.worksourceoregon.org/index.php/documents-aampamp-publications-mainmenu50/doc view/933-two-year-state-plan-modification-6-29-09?tmpl=component&format=raw http://www.portal.state.pa.us/portal/server.pt?open=18&objID=490413&mode=2 http://www.dlt.ri.gov/wio/pdfs/WaiverRequests_09.pdf Yes, but no limit specified. Applies only to http://www.workforcesouthcarolina.com/media/4254/sc_wia_wp_state_plan_mod_09_final_ver_june_30. pdf regular WIA funds. Up to 25% http://www.twc.state.tx.us/boards/wia/state_plan/09stateplan2.pdf http://dwd.wisconsin.gov/dwdwia/PDF/wia_state_plan_mod_py09-2010.pdf http://www.workforcewv.org/Logos/PLAN MOD 6-30-09 Final Version.pdf