Democrats Need a New, Aggressive Agenda
Colorado Democratic Business Coalition - November 1997
By Jim Gibson
Introduction
In a word, Americans are disgusted with government. They desperately want to move beyond the debates of the 30's and 60's and get real solutions for the 21st century.
While Democrats recognize the fallacy of every man for himself, we must also realize that government cannot protect everyone from adversity. Rather, our agenda must move beyond entitlements to empowerment strategies that equip the middle class and those less fortunate to compete in the global economy.
We must promote economic opportunity driven by growth generated in the private sector. Yes, government does have a responsibility to organize public resources that create opportunities for ordinary citizens. At the same time, each of us have a responsibility to take advantage of those opportunities, take care of our families, and give something back to our community.
Finally, precisely because government does have a role to play, it must be reinvented so that it is more responsive to those it serves and more accountable to taxpayers. New strategies must include non-bureaucratic approaches to governing, eliminating unneeded layers of bureaucracy and giving citizens more choices in public services.
Which takes us to some ideas about job training and what should be the next round of welfare reform in Colorado.
Job TrainingI believe that there is a direct policy and political connection between trade and training. In my view, we lost the debate over giving the President fast-track trade negotiating authority not because of trade or growth, but because of the perceived "winners" and "losers" in the global economy.
Most Americans recognize that the current economy - its low-inflation, low-unemployment, and rising incomes - a winning proposition for the country. They also know that expanding trade contributes to these favorable conditions.
Trades many winners - including consumers who pay lower prices - are more diffuse and less visible than the relatively few losers. Technological changes and global competition are dissolving the old Industrial Age social compact in which Americans could work in the same jobs for the same companies for a lifetime, with employers and unions providing secure wages and benefits, and government supplying an expanding "safety net" for hard times.
In the old, relatively closed domestic economy, blue-collar Americans could get middle-class jobs with a high school diploma and keep those full-time jobs most, if not all, of their lives. Workers needed less training and returned to the same positions after layoffs.
That model was fine for the Industrial Age but not today. Now, a high school diploma is a ticket to a low-wage job. With technology permanently wiping out millions of jobs each year, layoffs are no longer temporary.
Most of us expect to change jobs many times and will need to upgrade our skills continuously. We must take responsibility for and control of our careers. Public bureaucracies cannot do the job because they simply can't keep up with fast-changing labor market.
In other words, current public job training systems are miserably failing to help workers acquire new skills and find new jobs. Clearly, we need a new structure that enhances worker security and opportunity - while increasing domestic support for free trade.
We should scrap the failed hodgepodge of costly training programs we have now and replace it with a new learning enterprise controlled by its intended beneficiaries rather than bureaucrats. We should be nurturing a job training marketplace that is "user-friendly" and empowers individuals to meet their own specific needs in a comprehensive way. In a world in which cable television systems have 100 channels, banks allow their customers to do business by phone, bureaucratic, unresponsive, one-size-fits all government simply does not cut it.
To that end, Colorado should create “job opportunity vouchers” for every displaced worker. These are adults who lose their jobs they have held for three years or more because their company moved or closed, there was not enough work for them to do, or their position was abolished.
Think of the benefits. Vouchers would put displaced workers in direct control over services and funds and in charge of their careers. Workers would buy the job search, skill assessment, job placement, career counseling, education and training services of their choice, not that of some government employee.
Competition among private and public service providers would create a market dynamic that leads to innovations and improvements. Competition would also create accountability for performance - dissatisfied customers could “vote with their feet,” taking their business to more effective providers. Finally, the bureaucracies that lord over current programs would be reduced.
Here's how the system would work. When a worker becomes displaced, he or she would obtain a voucher from the state employment service and information about qualified providers of job and training services. Data would include what's available, the provider's performance records and the cost of services.
The voucher would buy up to $500 worth of employment services, such as skill assessment and job placement, and up to $2,000 of training and education services. Workers could buy these services from the wide range of sources now available - “headhunters;” temporary-job firms; for-profit training institutes; community colleges; non profit groups; government agencies and schools.
One possible source of funding could come from the current unemployment system. Rather than subsidizing idleness, unemployment benefits could finance training opportunities.
Right now, unemployed workers are not encouraged to develop new skills. In fact, the system makes it impossible to get training while receiving benefits. We should start thinking of unemployment as a seed of opportunity instead of being the end of the line.
In addition, the state could get a waiver from Washington to use funds from the Job Training Partnership Act and Trade Adjustment Assistance programs. According to one analysis, no new taxes or offsetting budget cuts would be needed - Just take the money away from the bureaucracies and give it to customers.
Down the road, we could link the idea of job opportunity vouchers for displaced workers to the larger purpose of investing in everyone's employability. Democrats could send the message that we intend to help every Coloradan - those with jobs, those without, and those not yet in the labor market - to acquire the skills and knowledge they need to succeed.
We can take this same basic non-bureaucratic, market-oriented idea and use it to take welfare reform to the next level.
Welfare ReformIn the last session, the Republican state legislature pushed the management of welfare programs down to the county level with virtually no framework for reform. The state's role is largely confined to setting some basic minimum standards.
For now, the news is great - record numbers of recipients are leaving the welfare system and getting jobs. The combination of a strong economy and the most employable recipients knowing that welfare now has time limits probably account for a large percentage of these successes. Unfortunately, both of these trends cannot last forever.
To prepare for the challenge and take welfare reform to the next level, state government should provide counties incentives to move recipients into private-sector work as quickly as possible. Similar to the previously-mentioned proposal, the state should provide funding for county-issued “Job Placement Vouchers,” that would be given directly to recipients to tap (and build) a growing competitive market of public agencies and private firms providing placement and support services.
Use and design of Job Placement Vouchers would be a county option, but counties that adopted this approach would retain the savings in reduced costs. County welfare bureaucracies would be transformed into agents for job placement in two ways - by the performance incentives accompanying the state funds, and by direct competition with private providers for voucher benefits.
This proposal would firmly commit state government to a clear strategy for welfare reform, based on the principle that work experience is the best path to permanent private employment. It would also spur a more serious devolution of power, leapfrogging both state and county bureaucrats. It would place resources in the hands of the actual recipients in a competitive job placement market, while giving each county the flexibility to tailor the new system to its particular economic and social circumstances.
Job Placement Vouchers would also reduce the cost of welfare-to-work programs by cutting out bureaucratic intermediaries between the recipient and private labor markets. But more importantly, they would significantly cut long-term public costs by moving those on public assistance quickly into productive private-sector jobs.
This strategy has already been working across the country in organizations like Denver's Women Employment and Education Institute, Cleveland Works, and the Good Will Job Connection in Sarasota, Florida.
As one example, America Works, a for-profit company based in New York State, acts as a kind of placement agency, finding private sector jobs for welfare recipients. Businesses pay America Works which pays a wage to the welfare recipient. If the business wants to hire the person permanently, the state pays a fee to America Works.
America Works has helped 5,000 welfare recipients find jobs. Of the recipients placed in jobs by America Works, New York State found that over 85 percent were still working on the job after one year.
New York saves money because the fee is a fraction of the cost of staying on welfare. That's an opportunity that we cannot afford to pass up.
Here is how a Colorado job voucher placement system could actually work. Before receiving a voucher, every welfare recipient entering the system would first sign an employability contract and search for a job. Only if the initial job search proves unsuccessful, would a recipient receive a Job Placement Voucher.
Counties would develop a list of available and qualified placement agencies, private employers, and other employment-based programs. Recipients would use the lists to make their service choices.
Payment to public and private placement agencies, employers, and other approved employment programs would be based on performance only. Vouchers for the public and private sector alike would be redeemed in full only after an organization had successfully placed the recipient in a full-time unsubsidized job for a set period of time.
Existing public subsidies for welfare recipients would be used to finance the new system. As an incentive, counties, that adopt a voucher system, would retain the savings.
One word of warning. The next round of welfare reform in Colorado should avoid spending more money on education and training programs, or that matter giving vouchers for that purpose.
For most welfare recipients, education and training alone only lead to marginal gains in earnings, rarely lifting families out of poverty. In the real world, most people learn their jobs on the job.
A recent independent study of California's innovative GAIN program found that stressing jobs over training was the way to go. In Riverside County, site of the most effective GAIN program, putting work first - instead of emphasizing training initially - increased earnings by $2,099 a person and decreased welfare payments by $1,397 per client.
Of course, education and training programs have value. Welfare recipients would benefit from more skills development, as indeed most of us would.
But employers value formal training less than the everyday skills and habits that make for a dependable worker. Nothing can replace showing up for work on time, doing a conscientious job, notifying employers of absences and communicating well with coworkers. Once reconnected to the world of work, more specific, useful, relevant and focused training can be provided.
Conclusion
In conclusion, voters want public solutions but fear government will only make the problems worse. The Guide the Ride campaign is only the latest example. President Clinton’s health care proposal is another.
At the same time, they are also rejecting the Republican message of every person for himself and “just get government out of the way.” That narrow view of the world simply leaves real problems festering.
Democrats have a clear opportunity to give voters solutions they can have confidence in, putting the public policy debate back on our terms. Like these job training and welfare reform initiatives, Democrats should, across-the-board, advocate non-bureaucratic strategies that use market-oriented approaches and give citizens more choices in public services.
That will be a winning formula for both Colorado and the Democratic Party.