THE DEPARTMENT of Labor has decided to end funding for a youth employment program that seems to meet every administration criterion for success. The program is inexpensive, oriented toward the private-sector and has a good record. It enjoys strong support among GOP stalwarts both in Congress and among business people. What could justify this self-destructive behavior?

The program in question, run by a firm named 70001 Ltd., finds jobs for the hardest-to-place youth in more than 50 sites around the country. Most participants are minority young people from poor families who often drop out before reaching high school. While low-cost placement programs such as 70001 have little effect on the ability to employ a person in the long run, the program has had enormous success in reducing the disastrously high levels of unemployment from which its target population generally suffers. Over 80 percent of youths who complete a brief program of job preparation are placed in jobs; the program works closely with private employers, and they give good ratings to program graduates. Its secret ingredient seems to be that rare quality: good management.

So successful has the program been that 31 senators--including Paul Laxalt, John Tower, Richard Lugar, Steve Symms, Robert Dole and Paula Hawkins--have urged the department to continue support. The Labor Department has not responded to their letter, but it says otherwise that it is greatly reducing its funding of nationwide programs such as 70001, a decision consistent with the administration's philosophy of giving more discretion to states and localities.

Giving them the flexibility to tailor job program needs to local conditions is a fine idea--as far as it goes. But under the CETA system, state and local governments already had plenty of discretion. What most CETA operators lacked was good federal guidance and successful program models. In fact, most of 70001's money already comes from public and private sources in local areas. But federal money provided a core of support essential to the firm's ability to coordinate, monitor and expand its network.

For an operation like 70001 to market itself to hundreds of states and localities, each with its own set of rules, is a bewildering and expensive business that such a low-overhead operation cannot afford on its own. Perhaps over time the firm can further reduce its dependency on national funding. But abruptly cutting off that essential support in the name of consistency is bad management and bad politics.