Jerold Nelson didn’t possess the skills needed to land a job at Interactive Blue, a utility contractor in Coral Gables, Fla. But the 51-year-old brought an unusual selling point: The company only had to pay him about $1.50 an hour.
Laid off for nearly a year, Nelson still wasn’t willing to work for nearly nothing. Instead, he qualified for a federal training program that temporarily subsidizes up to 90 percent of a new hire’s wages. The discount was enough for Interactive owner Robert Mena to try out Nelson, who last month won a permanent position helping to permit cable systems for the company.
“In this economy, it’s tough to take a chance on hiring someone who is not an exact match,” Mena said. “It gave us more flexibility.”
Nelson’s subsidized journey from long-term unemployed to promising employee could serve as a model for the next phase in Washington’s fight against one of the weakest job markets since the Great Depression.
When President Barack Obama unveils his job plan Thursday night before a joint session of Congress, analysts expect him to propose more hiring incentives like the one that gave Nelson his job.
A push to pay employers to hire would bring more attention to subsidies that aren’t new and, according to experts, aren’t that popular, either. The on-the-job training incentive that Interactive Blue received dates back to the 1970s, and already employers have a wide range of tax credits for hiring the poor, veterans, felons and other job seekers deemed in need of special help.
While still fairly obscure, hiring subsidies became more popular during the recession. The 2009 stimulus bill included hundreds of millions in extra funding for the programs, which helped local job boards offer more dollars for employers. “In the last 16 months or so, we have ramped up that program enormously,” Mason Jackson, head of Broward’s federally funded employment board, said of the on-the-job training effort.
Employment boards like Jackson’s Workforce One spend federal dollars on vocational classes to make the unemployed more attractive to businesses. But the recession made it harder to translate the extra training into job offers, since employers have so many applicants available.
With subsidies, employment boards try to offer employers a cheap way to test out an employee and see if he or she can handle the position.
“Instead of sending you to a computer class, I can send you directly to the employer,” said Rick Beasley, executive director of the South Florida Workforce Investment Board, which runs federal job-training programs in Miami-Dade and Monroe counties. “I can retool you on the job.”
The South Florida Workforce board said Wednesday it has put about 60 workers through the on-the-job-training program since July 2010. Workforce One said 252 people have used it in Broward since July 2010, with about 110 enrolled now. The latest federal data puts Broward’s unemployment rolls at roughly 95,000 people.
The training program only offers so much help for employers, and it limits who can qualify. In Broward, wage subsidies are capped at $5,000 per employee and up to three months of training. Applicants also are limited by their income levels: Someone with a family of four must make less than $44,000 a year to qualify. Eligibility rules and subsidies vary from county to county.
Employers face stricter eligibility rules for tax credits that can pay them up to $9,000 for hiring someone. To receive the rebates, companies must hire people on welfare, unemployed veterans, ex-felons, young people without schooling, or applicants who fall into other troubled categories. Going months without a job does not qualify for a tax credit — at least not yet.
Obama is expected to expand eligibility in his Thursday speech before a joint session of Congress. “The categories will be broadening,” a Labor Department official said Tuesday.
Already, states are experimenting with paying employers to hire the long-term unemployed.
In southern Connecticut, the federally funded job training board that serves Bridgeport raised $500,000 in private dollars to launch its program. Dubbed the Platform to Employment, it pays up to two months of wages for people who have exhausted all 99 weeks of federal and state unemployment aid. Coupled with counseling and volunteer work in the early weeks, the program hopes the free wages will spur employers to take a chance on workers.
“This provides them the opportunity to try someone risk-free,” said Adrienne Parkmond, executive vice president of the board, known as The Work Place. “We’re telling participants this is a six- to eight-week job interview.”
Parkmond said about 50 businesses have agreed to try the program. That means a small start for a region where 9,000 people have been jobless long enough to go beyond the 99-week cut-off for unemployment checks. That gap hints at the main criticism for incentive programs: They can only help so much if employers aren’t otherwise inclined to hire.
“On the margins, it has an effect,” said James Sherk, a labor expert at the Heritage Foundation, a conservative-leaning think tank. “It’s not going to get unemployment down one percentage point.”
Sherk noted that by targeting the long-term unemployed, an incentive program can make it harder for someone else — such as a recent graduate — to take the position. “You’re encouraging employers to hire one group over another,” he said.
Gary Burtless, a labor expert at the Brookings Institution, a liberal-leaning think tank in Washington, said employers generally don’t want to use government programs to hire workers who can’t find a job on their own. Past studies found that workers who told prospective employers about federal wage subsidies were less likely to get hired than those who kept quiet about their eligibility for the program.
“Employers really are suspicious,” he said. “Most employers have their own methods for recruiting workers.”
For Interactive Blue, the 11-person company usually has trouble finding people to fill the position Nelson holds.
The job, which pays about $15 an hour, requires applicants to have surveying skills and some knowledge of high-tech cable systems. Even with years working for an AT&T contractor and an associate’s degree in construction technology, Nelson didn’t quite fit the bill. But after three months of subsidized training, Nelson is working 40 hours a week for Interactive plotting utility schematics.
“I can do the site survey of the cables from the street to the cabinet,” Nelson explained as he used a wheel to measure the distance from the street to a freezer-sized utility locker for AT&T’s U-verse Internet system. “This is fiber optics.”
Supervisor Jose Escandell said the nearly cost-free training period was a great deal for Interactive, but also lessened the chances of Nelson ending up on the unemployment rolls again.
“From my side of the equation, for three months I’m getting 10 cents on the dollar,” in payroll costs, Escandell said. “At that rate, I can afford to take my time and train him.”
“Now,” Escandell continued, “he has a marketable skill that he can take to a competitor and say: I can do this.’ ”
Source: MCT Information Services