State Training Programs: Old Idea Gets New Boost

Washington watches how California retrains workers, creates jobs

AS the nation lurches toward recovery, politicians from statehouses to the White House invoke with broken-record regularity the No. 1 economic buzzword: jobs.

The question topping the agenda at the border governors' conference in May and at the National Governors' Conference in Boston tomorrow through Tuesday, is how to create and sustain employment and how to retrain employees in downsizing industries for new or expanding ones.

Against this backdrop, an old idea is gaining new currency: customized worker training. Last year, 40 states budgeted $339 million for such training; California, Texas, New Jersey, and Hawaii led the way, each earmarking from $50 million to $101 million.

``States are becoming more sophisticated in their understanding of what is needed to retrain workers, create jobs, as well as help existing businesses,'' says Steve Duscha, a training industry consultant who has just completed a national survey for the Congressional Office of Technology Assessment. ``They've realized that training is one big way to protect employment.''

In California, where Republican Gov. Pete Wilson and Democratic challenger Kathleen Brown have both built major campaign pledges around job creation, the country's oldest and largest state training program is being lauded as a national model.

An independent study released recently shows that the 11-year-old Employment Training Panel (ETP) program has achieved significant reductions in unemployment and has increased earnings for participants to a degree usually not associated with publicly funded programs.

``Most striking to us in looking at [training] programs over the years is that private-sponsored employee training almost always shows a substantial increase [in employment], whereas publicly funded programs show limited impact,'' says Richard Moore, associate professor of business management at California State University and author of the study. ``Here is a publicly funded program showing the significant impacts you would find from private models.''

According to the study, in the first year after ETP training, 1,767 ``new hires'' increased their average annual earnings from $11,883 to $21,166; 36,474 trainees boosted earnings from $30,504 to $33,125. The study tracked trainees from the 1990-91 program year (as well as 47,000 trained in 1989-90) into their second year after training.

Evelyn Ganzglass, director of the National Governors' Association Training and Supplement Program in Washington, says one of the biggest issues the federal government is examining is how existing companies can be strengthened through training programs. The Clinton administration has floated several trial balloons, one of which would stimulate the funding of retraining by urging companies to spend a percentage of their payrolls or by using tax money.

``This is the big issue as the national economy goes through so many changes,'' Ms. Ganzglass says. ``The problem is, we don't have much experience at the federal level. The California results are the only ones with data large enough to indicate [that] these same kinds of models can be operated at a significant scale.''

In California, eligible businesses apply to ETP for money to train new employees and retrain current ones. Funded by one-tenth of 1 percent of the unemployment insurance tax paid by the state's businesses, the program targets basic industries, primarily manufacturing firms threatened by competition.

The study showed that trainee productivity and earnings not only increased, but also stimulated other economic activity, boosting the state economy.

ETP training uses a stringent, performance-based standard that ensures a training payoff. ``The success factor of this program is that companies don't get their money until and unless that trainee has spent at least 90 days at his new job,'' says ETP chairman Ted Dutton. ``So the onus is not just training people, but placing them as well.''

Other states have confirmed that the no-pay-without-placement feature makes the California model work. ``A major component of this model is that we have something positive built in to show [legislators],'' says Dennis Sienko, head of the Prairie State 2000 Authority in Chicago, which focuses on training workers at small and medium-sized businesses.

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