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Promoting Innovation and Competitiveness
A New Generation of American Innovation

Making Federal Job Training Work Better for America’s Workers

Executive Summary

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Better Education for Better Jobs

Making Federal Job Training Work Better for America's Workers

  • President Bush is committed to providing America’s workers with better training for better jobs. Job training for American workers is more important than ever, and we need a new way of delivering job training in America.
  • America’s growing economy is a changing economy, and some workers need new skills to succeed. Today’s economy is an innovation economy. Two-thirds of America’s economic growth in the 1990s resulted from the introduction of new technologies – and 60% of the new jobs of the 21st century require skills held by only one-third of America’s workforce. We need to close the skills gap in America. Not enough workers are being trained quickly enough to take advantage of many of the new jobs that are being created. The Federal government provides state and local governments $4 billion through the Workforce Investment Act (WIA), but only 206,000 adults were trained last year.
  • President Bush has proposed significant reforms to Federal worker training programs to double the number of workers receiving job training, to ensure those programs work better for America’s workers, and to close the skills gap so we fill every high growth job with a well-trained American worker. The President has proposed reforming major Federal job training programs to put strict limits on overhead to ensure tax dollars support training for workers who need it. And, he has called for giving workers personal job training accounts called Innovation Training Accounts (ITAs).

Background on the President’s Job Training Initiative

  • The Problem: Currently, the Federal government spends almost $23 billion for more than 30 programs spread across 10 departments and agencies. The result is a confusing hodgepodge of programs, some of which have remained fundamentally unchanged for decades, and administrative costs that prevent too many dollars from getting to the workers who need training the most.
    • Bureaucracy: The programs in place to train workers are out-of-date, overlapping, and ineffective. Too often, red tape and administrative costs eat up job training money before it even gets to workers. For example, the Department of Labor found that one of its One-Stop Career Centers was using less than 10% of its Federal money for training displaced workers. Most of the funds went to administrative costs—not training workers. President Bush believes that every dollar spent on unnecessary bureaucracy is a dollar taken out of the pocket of a worker who needs job training.
    • Complexity: Job training programs are set up with so many rules that many workers, potential employers, and local community colleges do not participate. For example, 30 states have been granted temporary relief from these requirements so they don’t lose their link with community colleges. However, there are limits to what we can do under the current law. President Bush recognizes that the best training is not filling out forms – it is learning on the job or at a community college.
    • Limited Accountability: Currently, there is no clear standard or benchmark to measure the effectiveness of federal job training programs. Federal grants to states for job training have 17 different measurements of accountability. President Bush proposes to refocus these programs on the end results that matter most to America’s workers – Did you get a job? How long did you keep it? And how much are you being paid?
    • Failure to teach skills in demand: Remarkably, even though the law requires it, many job training programs do not assess what skills are in demand for jobs in the worker’s area. Instead, workers are moved through the system with little regard for whether they will have a realistic chance at a job when they complete training. President Bush believes we should be training workers for jobs in sectors of the economy that are most likely to grow.

The President’s Solution

    • Less Red Tape and More Help for Workers: The President’s plan establishes a clear goal that the vast majority of job training dollars should go to the workers who need them – rather than to bureaucratic overhead. Currently, administrative expenses are capped at 15%, but regulatory loopholes allow too many of our training dollars to be spent on bureaucracy and other non-training services. The President’s goal is to double the number of workers receiving job training by maximizing the available Federal dollars going to workers and eliminating unnecessary overhead costs.
    • New Innovation Training Accounts (ITAs): The President proposes new Innovation Training Accounts to provide workers with more flexible and responsive assistance. Workers would have more job training choices – they would be able to use community colleges, private-sector training providers, local businesses, or community organizations – to get the help they need in the most effective and efficient way possible. These ITAs would give states considerable flexibility to tailor training programs to the unique economic conditions of each state. ITAs would consolidate 4 major training and employment grant programs totaling $4 billion into a single grant, eliminating unnecessary overhead costs and making Federal support more effective and efficient.
    • More Accountability: Under the President’s plan, states would be given more flexibility to design their own workforce training programs. But they would also be required to set clear goals and outcomes focused on the number of workers placed in jobs, the duration of the job placement, and the earnings of the job. The President proposes consolidating the number of state performance goals of the Federal job training system from 17 to 3. Under the new goals, accountability will be determined by asking these questions: How many people are finding work? How much are workers earning in their new jobs? How long are they staying in these jobs?
    • Jobs for the 21st Century Initiative: The President’s Jobs for the 21st Century Initiative, announced in the State of the Union Address, includes a $250 million proposal to help America’s community colleges train 100,000 additional workers for the industries that are creating the most new jobs. This expands the Department of Labor’s successful High Growth Job Training Initiative, launched under President Bush in 2001, which has provided $71 million in 38 partnerships nationwide between community colleges, public workforce agencies, and employers. These initiatives help community colleges produce graduates with the skills most in demand by local employers.
    • Personal Reemployment Accounts: The President has also proposed $50 million for a pilot program of accounts of up to $3,000 for those unemployed workers who have the most difficulty finding jobs to use toward job training, transportation, childcare, or other assistance in obtaining a new job. Workers who found a job quickly would be able to keep the balance of the account as a reemployment bonus.