Supporters describe the program as a win-win. Job-seekers continue receiving unemployment checks and qualify for a small stipend, paid from an account normally used to cover administrative costs associated with the unemployment system. Employers, meanwhile, pay nothing beyond the taxes they already pay for jobless benefits. The program also helps the state and the larger private sector, because the more people who get jobs, the more income tax revenue the state collects and the lower the jobless benefits that businesses must pay.
Nearly a quarter of the 23,000 job-seekers who have successfully finished the program eventually were hired by the firms that trained them; nearly 60 percent were hired somewhere within 90 days.
With national unemployment at 9.1 percent and voter frustration mounting, Obama is under pressure to do more to bolster the struggling labor market, and White House interest in Georgia Works is running high ahead of the president’s speech, the Wall Street Journal and other outlets have reported. Obama praised the initiative in a speech last month in Atkinson, Ill., where he said it was a “ smart program.”
But a closer look at Georgia Works shows that the idea, popular though it is, comes with its own set of challenges. Perhaps the most ominous for Obama is that it has not made much of a dent in Georgia’s 10.1 percent unemployment rate, eighth-highest among the states. In July, Georgia was last in the nation in year-over-year job creation, shedding 92,300 jobs. In the same month, just 14 job-seekers statewide were paired with employers under Georgia Works.
Nine months ago, the Georgia Labor Department, which oversees Georgia Works, was placing thousands of job-seekers each month into the program, according to state figures. Monthly enrollment reached an all-time high of 4,691 in November. By January, however, only 12 job-seekers statewide were enrolled in the program, and no more than 24 have been enrolled in any given month since then.
“We became a victim of our own popularity,” said Mike Thurmond, the former Georgia labor commissioner who launched the program eight years ago.
Just before he left office at the end of last year, Thurmond (D), a former U.S. Senate candidate, expanded Georgia Works so that it could be accessed by anyone seeking a job — not just those on the official state unemployment rolls, as the rules previously stipulated. He also shortened the training period from eight weeks to six to allow more people to cycle in and out of the program. The idea was to reach out to the “invisible” jobless population, including those whose benefits have run out.
The Georgia Labor Department sped the process along by issuing news releases, posting information on its Web site and ensuring that career centers informed job-seekers about the program, said department spokesman Sam Hall. But the campaign, apparently, was too successful.
“No one foresaw the huge influx of people that came into it,” Hall said.
The surge of applicants caused a cost explosion that nearly bankrupted the program. Under another change made by Thurmond last year, the stipend each Georgia Works participant was entitled to — money meant to help defray transportation, child-care and other costs associated with working in an unpaid training role for more than a month — doubled from $300 to $600. By December, three months after the change went into effect, Georgia paid out $2.2 million in stipend checks, compared with $407,000 in August.
The state was left with no choice but to change course. Georgia’s new labor commissioner, Mark Butler, took office this year and immediately tried to put the program on a sustainable course. He slashed the stipend checks from $600 to $240, increased the training period back to eight weeks and, most important, excluded job-seekers who are not on the official state unemployment rolls. The program doesn’t even have its own Web site anymore.
“There was no way it could have continued under [the previous] scenario,” Hall said.
There are less costly ways to operate programs like Georgia Works. New Hampshire, for instance, has replicated Georgia’s program with one key exception: It does not provide stipends to participants. Many labor experts say that there are plenty of job-seekers nationally who would agree to work while receiving unemployment benefits, but as an unpaid trainee without the stipends, especially in the current economic climate. It is unclear whether the Obama administration would consider including a stipend.
Even if the White House wants to try out Georgia Works without a stipend, there are administrative costs that could add up fast. The Georgia Labor Department, for instance, requires employers to complete paperwork to participate in Georgia Works, and it checks in with them to ensure they are complying with program rules. Employers, for instance, can’t ask job-seekers to work more than 24 hours a week during the program, and the state monitors whether businesses simply sign up to obtain free help under the initiative, with no intention of hiring anyone. Thurmond, the former labor commissioner, said there have been several instances of employers taking advantage of the program.
Many labor experts think the risks for fraud would be much greater if the program is extended nationally. But the potential solution to that problem — providing oversight for the hundreds of thousands of job-seekers and employers that might be interested in such a program if it is offered nationwide — could be an administrative nightmare, critics say.
Some groups, led by the National Employment Law Project, see a more fundamental problem with Georgia Works: They think it is illegal. NELP, which advocates for low-income workers, said job-seekers who participate in the program should be paid the minimum wage because the opportunities given to them do not meet the legal definition of “training.”
George Wentworth, an NELP senior staff attorney, said the legality of Georgia Works hinges on a “very slender legal distinction between ‘training’ and ‘employment.’ ” Among the concerns if the program goes national are whether it would be up to the employer or the government to handle workers’ compensation and other claims made while job-seekers are working as unpaid trainees.
“Right now,” he said, “federal unemployment law would, we think, prohibit this kind of program.”
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