Labor Department Pushes for Career Advancement Accounts

In his State of the Union speech and a subsequent campaign-style tour, President Bush focused on the education and research-and-development elements of his plan to strengthen U.S. economic competitiveness.

When the White House released its budget this week, the Department of Labor’s role in Bush’s 10-year, $136 billion initiative became apparent. The agency seeks to extend the reach of the U.S. workforce training system by putting federal dollars directly into the hands of people who have lost their jobs, want to change jobs or are trying to enter the labor market.

The Bush administration has requested $3.4 billion to establish “career advancement accounts.” Instead of receiving funding for several different training programs, states would receive a block grant primarily for the accounts. States would have to spend 75 percent of the federal money they receive on the career accounts, while 22 percent would be allocated for career assessment and job search assistance and 3 percent would go for administration.

The White House proposed reducing the Employment and Training Administration’s budget by $620 million over the next fiscal year as part of an overall 3.9 percent Labor Department cut. But Labor officials asserted that career accounts would free more money for education by slashing overhead and administrative costs, allowing the government to increase the number of workers trained annually from 200,000 to 800,000. Unlike existing federal individual accounts, the career accounts allow more freedom to choose training providers.

“Instead of funding institutions, we are funding individual workers,” Labor Secretary Elaine Chao said at a budget briefing February 6. “It’s very empowering. They will give workers so much more flexibility in determining their own career goals.”

Critics assert that the proposal would cut training money, curtail rapid-response programs following mass layoffs and end counseling services. Career accounts, which are renewable for one year, have an annual cap of $3,000. Under current law, workers can receive more than $3,000.

“It really limits the options of the people in the system,” says Jane McDonald-Pines, workforce policy specialist for the AFL-CIO. The administration “cut per capita funding to reach more people. When you give people fewer resources than they currently have for training, you inevitably reduce quality.”

The Bush administration counters that the country’s training system, which focuses on the unemployed, lacks the speed and agility to equip workers with skills required for the global economy.

“Talent development and workforce training are critical components of competitiveness,” says Emily Stover DeRocco, assistant secretary of labor for employment and training. “We are using all of our discretionary resources to fund strategies that are designed to connect workers, educators and our public workforce system so that workers can be better educated and prepared for the jobs of the 21st century.”

But career accounts must first survive the long budget process. In addition, the Workforce Investment Act, which contains the current training system, is awaiting Senate action. A House Republican aide says that bill, rather than the administration’s new training idea, will be the bigger priority on Capitol Hill this year.

Democrats are even less enthusiastic about career accounts. “President Bush wants to wipe out the nation’s major job training programs in order to create an untested voucher scheme that will make it harder for workers to afford legitimate job training programs,” says Tom Kiley, spokesman for Rep. George Miller, ranking member of the House Education and the Workforce Committee.

—Mark Schoeff Jr.