Lost Jobs

'Recovery Accounts' Revive A Controversial Bush Initiative

Rick Griffin, left, of Maricopa Workforce Development, helps New Orleans evacuee Troy Felder create a resume at a job fair in Phoenix.
Rick Griffin, left, of Maricopa Workforce Development, helps New Orleans evacuee Troy Felder create a resume at a job fair in Phoenix. (By Paul Connors -- Associated Press)

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By Neil Irwin
Washington Post Staff Writer
Saturday, September 17, 2005

President Bush's proposal to create "worker recovery accounts" to help those left jobless by Hurricane Katrina is based on a controversial approach to helping the unemployed that his administration pushed two years ago with little success.

In a speech Thursday night, the president proposed making those left unemployed by the storm eligible for a one-time $5,000 grant they can use for job training, child care, transportation and other help they need to be able to return to work.

The accounts are similar in purpose and design to "personal reemployment accounts," which the Bush administration sought in 2003 along with tax cuts passed that year. Labor Department officials said the hurricane recovery accounts are based on the same principles as the earlier effort.

"Individuals want to be empowered to take ownership of their own careers, and they know best what kinds of assistance they need to find reemployment," said Labor Secretary Elaine L. Chao in a statement yesterday.

In 2003, the Bush administration asked Congress for $3.6 billion to fund personal reemployment accounts, which were intended as a major new federal program for dealing with joblessness. Officials characterized the plan as a way to help the unemployed take control of their efforts to return to work, granting them $3,000 for things such as community college classes and taxi rides for job interviews. Those who found a job would be rewarded with the money remaining in their accounts, in effect a bonus for gaining work.

But many liberals worried that the accounts would eventually replace unemployment insurance and other long-standing parts of the social safety net. And many conservatives didn't care for the idea of creating a large new government program.

"It wasn't popular with either Republicans or Democrats on the Hill, the way the president proposed it," said Ross Eisenbrey, vice president of the liberal Economic Policy Institute. Eisenbrey and others on the left were critical of provisions under which the reemployment-account recipients gave up other benefits for the unemployed.

Beneficiaries of the newly proposed accounts would not have to forgo their regular jobless benefits, Labor Department officials said, though in other respects, the two programs are largely the same. People who became unemployed because of Katrina could apply for an account, and those deemed eligible would be awarded the $5,000 grant, administered and monitored by state employment agencies. A recipient who finds a job within 13 weeks could keep up to $1,000 of any money left in the account.

The idea is not untested. A pilot program for reemployment accounts started in February in seven states. The results so far are promising, said the official running the test program in West Virginia, but he added that it is too early to say whether the program will be more effective than traditional employment benefits in helping people find work.

"This is something that's brand new, and we're trying to mold it as we go, because we don't really have precedent to go on how this program will operate," said James Hairston, a program coordinator with Workforce West Virginia, which has established accounts for 161 job-seekers since March.

In the West Virginia program, state officials review each payment request to ensure that the funds are being used appropriately. Recipients keep 60 percent of the money left in their accounts if they find a job within a year, and the other 40 percent if they remain employed six months later.

Administration officials are monitoring the pilot programs as they shape post-Katrina assistance. They said existing programs to provide job support are narrowly focused and do not provide recipients with the flexibility to get the help they need.

But critics argue that unproven approaches are a bad idea in emergency situations.

"There is certainly value in people having choice, and that's what the accounts would provide," said Margy Waller, a visiting fellow at the Brookings Institution who studies employment. "But choice works best when you have information about what training is available and where to get child care. With a new program like this, we have no infrastructure to provide that information."


© 2005 The Washington Post Company

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