Manhattan Institute for Policy Research.
search  
 
Subscribe   Subscribe   MI on Facebook Find us on Twitter Find us on Instagram      
 
 
   
 
     
 

Albany Times Union

 

Here's A Jobs Program That Works, Governor

January 11, 2011

By Fred Siegel

PRINTER FRIENDLY

Gov. Andrew Cuomo faces a statewide unemployment rate of more than 8 percent and a budget shortfall for the current fiscal year estimated to be as high as $10.5 billion. If the governor is looking to cut costs, he can turn to most of the state’s welfare to work and job training programs.

The current programs that involve tax credits and training to place welfare recipients and the unemployed in private sector jobs cost the state about $5.2 billion a year. But there is little to show for the expenditure. Labor Department programs that subsidize companies to train new workers are entangled in the red tape of government rules and regulations. The government is slow to pay the employers and companies have been wary of government coming in to audit books and review compliance.

Tax credits to encourage companies to hire also have been largely futile. There are two grave problems with tax credits. First, companies losing money do not need the credits to begin with. Second, the companies don’t receive the subsidy until more than a year after the initial hire -- too late for business struggling in this economic climate.

But there is a program that has been effective. A $14 million subsidy program funded with federal stimulus dollars and managed by the state Office of Temporary and Disability Assistance has helped businesses keep people employed and actually created jobs. It might well be a model for tackling our seemingly intractable high unemployment.

Here’s how it works: America on Demand, a staffing company that is a subsidiary of America Works, places job seekers in temporary positions. The employer has no obligations to hire at the conclusion of the subsidized wage period and has little or no risk during the period of subsidized employment because the staffing company is the employer of record. All of the paperwork involved in the program is performed by the staffing company. The employer may terminate the arrangement at any time.

The employer sees an offer to hire from the staffing company that is no different from an offer without a subsidy, except the net wage cost is lowered by the amount of the subsidy during the trial period. Companies have flocked to the program because of the streamlined process and because they do not have to wait for payment.

Only if the worker stays for 90 days in the job can the contractor receive the full reimbursement for its services from the state. This assures that the worker stands a good chance of being hired and staying in the job. In fact, in one program where more than 200 people have been placed, close to 100 percent have been hired permanently.

The implications for job retention and creation in the private sector are eye-popping. By subsidizing wages in a user-friendly program, companies can use the subsidies to stave layoffs. As well, jobs have been created by companies now able to bring on new employees because costs have been dramatically reduced.

The federal stimulus money is running out. But if Cuomo is looking to maximize state spending on job placement, he should consider ending or reducing programs that have repeatedly failed not just in New York but around the country. He could use those same dollars to continue the successful wage subsidy program.

What better way to show that business as usual, that is, subsidies for failure, are no longer the state government’s standard operating procedure?

Original Source: http://www.timesunion.com/default/article/Here-s-a-jobs-program-that-works-Governor-949495.php#ixzz1AlVCApBL

 

 
 
 

The Manhattan Institute, a 501(c)(3), is a think tank whose mission is to develop and disseminate new ideas
that foster greater economic choice and individual responsibility.

Copyright © 2014 Manhattan Institute for Policy Research, Inc. All rights reserved.

52 Vanderbilt Avenue, New York, N.Y. 10017
phone (212) 599-7000 / fax (212) 599-3494