The Public Policy/Buddy, Can You Spare a Grant?
Baldwin, Fred D.
THE PUBLIC POLICY BUDDY, CAN YOU SPARE A GRANT? by Fred D. Baldwin An ideal public employment and training program would give work to the genuinely needy (and only to them) and would help move...
...Large-scale employment programs in America began with the New Deal, but CETA's immediate predecessor was the Manpower Development and Training Act of 1962 (MDTA) and some of the Johnson administration's anti-poverty legislation...
...My own impression is that when local sponsors tip the balance in favor of real jobs, the other benefits tend to fall into place...
...It did say that employment and training programs "targeted" at the low-income population are not inflationary because adding workers at the bottom of the wage scale has little effect on wage rates up the line...
...The Republicans almost certainly have the better of this argument, but the Democrats were not about to upset organized labor by conceding the point...
...For that matter, it would be nice to find an investment as safe as a Series E bond that grew like Xerox in the sixties, or a family car that combined the hauling capacity of a station wagon with the gas mileage of a Honda Civic...
...AH that paperwork, all those political deals, all those hours of staff time-perhaps undone by a handful of local accountants...
...First, they said that the minimum wage ought to be lowered for youth since, while the unemployment rate for adult men in January 1979 was only 4 percent, the rate for teenagers was 15.7 percent...
...The Brookings study itself, however, is much more encouraging...
...At the national level, a balance must be struck among the goals of job creation, providing useful public services, and helping the dis-advantaged...
...Much the same balance must be struck at the local level...
...Unfortunately, there is some tension between minimizing displacement and maximizing usefulness...
...See James Kunstler, "I Was a CETA Goldbrick," The American Spectator, May 1979...
...They then made a series of educated guesses about whether CETA created the jobs in question or merely paid for jobs that would have existed anyway...
...It tightens income eligibility standards and increases the period for which an enrollee must have been unemployed...
...Marshall neglected to mention that when the comparison was made between post-CETA salaries and those earned a full year earlier, the increase for the same group was only 20 percent-respectable, but not striking, considering that the individuals were about two years older and that the increases were not adjusted for inflation...
...Although the procedures may be extremely sophisticated, "educated guesses" is a fair way to describe the results, considering that recent studies have estimated displacement at almost every number between zero and 100 percent, a range that even the uneducated might have arrived at...
...It turns out that we know quite a bit about the administration of CETA but have only more or less educated guesses about its effects...
...The JEC stopped just short of saying that the Full Employment and Balanced Growth Act of 1978 (Humphrey-Hawkins) is unrealistic in setting a 4 percent unemployment target...
...The words "employment" and "training" are actually used in their everyday senses in CETA: The former refers to the certainty that someone will collect a salary...
...That is, a private employer can get a tax credit for certain training costs but not for any part of the salary he pays a disadvantaged worker...
...There is a good chance that the young men you see cutting weeds along the highway are CETA enrollees, as may be the desk clerk in your public library, and as, just possibly, may be the fellow sitting behind a desk in a corner of your courthouse who seems to be doing nothing in particular...
...Finally, the Department of Labor, which administers the CETA program at the federal level, churns out an immense volume of printed material on CETA, ranging from inexpressibly tedious reports by contractors to a slick monthly magazine, Worklife...
...It is what it is because the policy goals of a national employment program constrain each other as inexorably as size and weight constrain vehicular acceleration...
...CETA is nearly ubiquitous...
...The best sponsors hired without discrimination but were ready to fire enrollees immediately upon being given cause, even though they lost what the Department of Labor calls a "positive termination," meaning almost any reason for leaving the program other than dismissal, dropping out with no pretense of going anywhere, or arrest...
...Young men are likely to find that not many firms are hiring recreation counsellors...
...It is short and relatively readable...
...There is no way of knowing statistically how common his experience was, but no one familiar with the program would claim it was a rare case...
...Directors of many social action agencies, school administrators, local bureaucrats, and other local sponsors are often competent people, but many have built careers on avoiding accountability...
...The term "manpower" was dropped from the federal lexicon only a few years ago on the grounds that it was sexist) MDTA was a federal program: The Department of Labor (DOL) dealt directly with local organizations and entered into about 10,000 separate contracts each year...
...Its recommendations are either concerned with administrative matters (e.g., allocation formulas) or are bland beyond parody (e.g., "research should be undertaken to assess the economic and noneconom-ic effects of CETA...
...After exhausting their allotted term on a CETA payroll (currently a maximum of 18 months), do enrollees slip back into unemployment and dependency on welfare...
...All that has now changed, at least until the economy turns down again...
...It is more nearly a reference work than a critical study...
...1 (18 Months after Entry), "July 1978] shows wage gains of 136 percent for male enrollees from "first quarter prior" to "fourth quarter post...
...The concluding recommendation of the JEC was that "the Administration should prepare a standby program to increase the number of CETA public sector jobs to be proposed to Congress in the event that the slower economic growth forecast for this year results in a significant rise in unemployment...
...The old WPA term of opprobrium, "leaf-raking," is unfortunate...
...As long as the program is viewed mainly as a counter-cyclical measure, the question is not necessarily relevant...
...As noted," the "new CETA" is indeed an anti-poverty program...
...Given that everyone was expecting worse news, the finding that four out of five CETA jobs would not have existed without CETA funds is well within politically tolerable limits...
...That is not at all the same as saying that such jobs are necessarily make-work, but the problem curls like a small worm at the core of the new CETA regulations, which encourage "special projects" over more routine work...
...If county and municipal workers are laid off, only to be re-hired a few weeks later under CETA, the whole thing is a charade...
...This process is known as "creaming...
...They would like to damp the swings of the CETA policy pendulum so that the program just hangs there without the criticism it has received lately...
...About 1.8 million others were enrolled at least briefly in other CETA programs...
...Despite the bipartisan nature of the JEC report, the Republican minority got in a few jabs...
...To be sure, local sponsors often "creamed" when they could, reasoning that taking care of drug addicts and other people with really serious personal problems was more than they could handle...
...The beginning of wisdom is to understand that CETA, or something like it, is here to stay...
...The Brookings study calls all these tradeoffs a "two-dimensional policy bargain...
...A job that no one at the local level has been previously willing to pay for is, almost by definition, slightly suspect...
...Monitoring also requires judgments, but more about factual situations than basic assumptions...
...The field observers found that local officials were growing more and more cautious about accepting "free" federal money that could be cut off upon a change in congressional or bureaucratic whim...
...Even during the period of CETA's most rapid growth, I think that useful work was the rule, though for a number of reasons I would not have seen the worst boondoggles...
...Although Congress only recently decided that individuals who are well-educated and normally well-paid should not be eligible for CETA slots, there was never any question that they should have been doing useful work...
...The Joint Economic Committee did consider the question of whether CETA could be replaced by tax and monetary policies and decided that it could not...
...Now what was it you wanted to know about CETA...
...The DOL now contracts with about 460 state and local governments (including some multi-county bodies) that are called "prime sponsors...
...Even in public sector jobs, the specter that has haunted CETA (both as an anti-poverty program and as a counter-cyclical one) has been "displacement"-the possibility that it is nothing but a disguised form of revenue-sharing...
...The local sponsor who knows that the Department of Labor is going to publicize his placement rates, or even one who is serious about getting the best work out of his enrollees, will select the best qualified applicants he can slip in under the eligibility guidelines, whatever those may be at the time...
...For general readers, things go downhill from there...
...When he says he's a "coordinator," a "program planner, " or an "outreach director," you should pat your wallet...
...It conjectured that the increased numbers of women, racial minorities, and young people in the labor force ("labor force" means both those who have jobs and who say they are looking for them) have increased the proportion of workers with relatively low skills...
...According to the Brookings report, the better-regarded studies have offered dis-couragingly high estimates of displacement, starting at about 40 percent during an initial program year and increasing to 80 percent or more the longer a program remains in operation...
...The Brookings field workers visited a large number of projects, found out what CETA enrollees were doing, and made inquiries about whether or not that particular work had been done before...
...Parenthetically, that may be one reason that women tend to show higher post-CETA gains in earnings, compared to a year before entering the program, than men...
...Some recent data indicate that the program has worked fairly well, all things considered...
...My mandate," one local program executive told me recently, "is to keep this program out of the newspapers...
...Can we seriously recommend that not one penny be spent on well targeted wage subsidies in the private sector, when the Report itself stresses the efficiency and importance of greater usage of the private sector...
...The Committee found that measures to give the economy a general stimulus (a) increase demand for skilled workers faster than they increase demand for unskilled workers and hence push up wages, (b) cannot take regional labor market differences into account, and (c) will tend to lower average productivity because the United States is already using its most productive capital plants and equipment at a high level...
...The minority members also complained that the private sector job program under CETA permits only a training subsidy, not a wage subsidy...
...You can find CETA workers insulating poor people's houses, and if you turn on your FM radio near Washington, D.C., you may hear chamber music played by a CETA-funded ensemble sponsored by a local performing arts council...
...Perhaps the greatest danger of the "new CETA" is that local sponsors will decide that they now have a built-in excuse for low placement rates and will simply opt for the projects least likely to attract criticism, whether or not they represent the most useful work for the community and the best experience for the CETA workers...
...It also lowers the average wage that a sponsor may pay its en-rollees to $7,200 a year, which comes to $3.46 per hour for a 40-hour week...
...Two thoughtful reports have been written as part of an ongoing study by the Brookings Institution for the National Commission for Manpower Policy, a blue-ribbon panel whose members include five Cabinet officers and other prestigious people from business, labor, and academe...
...Some concluding personal observations may be in order...
...For those who have a taste for muckraking written with the verve of an accounting textbook, the General Accounting Office ("Congress's watchdog") has produced a large number of studies with the long, tell-it-on-the-cover titles that are GAO's hallmark, e.g., "Employment Programs in Buffalo and Erie County Under the Comprehensive Employment and Training Act Can Be Improved...
...What do we mean by "before" and "after...
...The reports on this survey, which began to appear in 1977 and are still coming out, are heavy going but contain more data on CETA enrollees than anyone has ever had before...
...When the feds change the rules, the locals feel entitled to re-decide what they will deliver...
...There are basically two ways to attempt to measure it: by econometric studies or by project-by-project monitoring^ Econometric studies proceed by taking public employment statistics and making educated guesses about what they would have been if the CETA program had not existed...
...The Republicans had this to say: We have spent billions of dollars subsidizing wages through the public sector...
...sometimes they inform the feds of this, sometimes they don't...
...A comparison group is being included in the survey, but data on it are not yet available...
...Unlike the Secretary of Labor's press releases, the DOL/Westat report is a model of statistical circumspection, emphasizing that no one can be sure that the CETA experience caused the increases that were observed...
...One may wonder at times if the DOL/Westat work is worth the price, but anything less would almost certainly not be...
...But the question is highly relevant for a program aimed at people who have had low incomes most of their lives...
...Strictly speaking, CETA is not one program but many...
...The "primes" in turn subcontract with the diverse set of public and private nonprofit groups that actually hire and supervise CETA employees...
...This creates some incentive to improve the skills of low-income workers, but does not create any incentive to hire them in the first place...
...The idea is to provide temporary work-period...
...Reading the analysts' cautions is a reminder that some of the recommendations for increasing local research and evaluation, which are scattered throughout the National Academy of Sciences volume like raisins in a tapioca pudding, may be misdirected...
...Instead of these good things, we have compromises, one of which is CETA, an abbreviation probably better known than the name for which its letters stand: the Comprehensive Employment and Training Act...
...Altogether, during the federal fiscal year that ended last September, about 2.5 million individuals were enrolled in the public service employment titles of CETA (over 2 percent of the labor force...
...Women are likely to be placed in admittedly sex-stereotyped jobs, but later they benefit from a private sector demand for typists and file clerks...
...That was apparently what Labor Secretary Marshall had in mind when he wrote in the Washington Post on May 20: "On the average, the incomes of those who were predominately unemployed prior to CETA almost doubled...
...A comprehensive study of CETA in the mid-1970s may be found in CETA: Manpower Programs Under Local Control by William Mirengoff and Lester Rind-ler, a 327-page "staff paper" prepared for the Committee on Evaluation of Employment and Training Programs of the National Research Council and published in 1978 by the National Academy of Sciences...
...Fred D. Baldwin is a consultant on public program management living in Carlisle, Pennsylvania...
...In this case it is harder to separate iacts-from bombast...
...In other words, keep the pendulum poised for another swing...
...It is a monitoring study...
...During the last few years I have seen a great many projects using CETA labor...
...For evaluation of policy alternatives, one would be better advised to read budget issue papers prepared by the Congressional Budget Office, such as "Public Employment and Training Assistance-Alternative Federal Approaches" (February 1977...
...JL or some time economists have suspected that the rules to prevent displacement in CETA have merely served to guarantee that it cannot be measured...
...As long as CETA is aimed at poor people, make-work may be less of a problem than it has been in recent years for the unfair but valid reason that an idler with a lawnmower is more noticeable than one with a pencil...
...The passage of CETA in December 1973, after pressure from the Nixon administration to decentralize federal programs and to combine special-purpose programs into a few broad categories, was a major administrative reform...
...It would give them work that really needs doing, and it would not displace people already on the job...
...A reasonable working definition of the structurally unemployed is that they are a group of people who lack the skills, educations, or attitudes that will enable them to get and hold unsub-sidized jobs...
...The question is extraordinarily hard to answer...
...The most important ongoing research is the Continuous Longitudinal Manpower Survey, a constantly growing body of before-and-after data on CETA workers being analyzed by Westat, Inc., a well-respected firm that specializes in statistical studies...
...the latter, to the possibility that someone may acquire a skill...
...Both Republican and Democratic members endorsed the 1979 JEC report, the first time in 20 years this has happened...
...Brookings put displacement at between 15 and 20 percent, much lower than anyone had expected...
...If someone tells you he has a leaf-raking job and means it literally, there is a good chance that the leaves need to be raked...
...Doing anything like first-rate research on placements and before-and-after earnings is expensive and requires a national sample...
...They might have been more cautious if there had been any danger that the majority would take them seriously...
...The rate actually declined slightly between the first and second rounds of observation, just the opposite of what the economists had predicted...
...Even this finding, however, should be welcomed with some caution...
...The JEC professed some puzzlement why structural unemployment, long thought to be about 4 percent, now appears to be 6 percent...
...The Congressional Budget Office estimated two years ago that a dollar spent on public employment saved about 25 cents in unemployment compensation and other welfare payments, and noted that savings increase when CETA jobs are reserved principally for the poor...
...by Fred D. Baldwin An ideal public employment and training program would give work to the genuinely needy (and only to them) and would help move them into unsubsidized private jobs fast...
...If you want to become a CETA buff, there is no shortage of literature, though much of it consists of reports and studies that no normal person would read from cover to cover...
...The more recent paper is entitled "Monitoring the Public Service Employment Program: The Second Round" (March 1979...
...That brings us to the last of the big questions about CETA: what the program means to the lives of the participants...
...The available data from the Department of Labor's Continuous Longitudinal Manpower Survey ["Follow-up Report No...
...The costs of CETA in 1979 will be roughly $5.4 billion if you count only public service employment jobs, or over $10 billion if you also count various training and youth programs...
...That means programs like CETA are needed to combat "structural" unemployment, defined as that amount of joblessness that cannot be reduced by tax and monetary policies without increasing inflation...
...Widespread waste, impropriety, and inefficiency in such spending is well documented...
...CETA Title VI more than doubled in size each year between 1974 and 1977, and it was aimed at "cyclical" unemployment, i.e., was an anti-recession program...
...No one knows how much a private wage subsidy would cost, and the monitoring problems would be horrendous unless the Republicans were making a case for spreading the waste, impropriety, and inefficiency around in a less doctrinaire way than the Democrats had done...
...These changes are reactions against the abuses described by Kunstler in his "Goldbrick" article...
...For evidence of CETA's current political status, the most important document is a report of the Joint Economic Committee entitled "The Effects of Structural Employment and Training Programs on Inflation and Unemployment" (March 29, 1979...
...Over the years it has swung back and forth between being an anti-poverty program aimed at the low-income unemployed (structural unemployment) and an anti-recession program (aimed at cyclical unemployment...
...Local sponsors were delighted to find that they could legally hire college graduates, second-year law students, and even Ph.D.s, so long as they had been unemployed for 30 days...
...If by "before" we take the quarter immediately preceding enrollment in CETA, the requirement of several weeks' prior unemployment virtually guarantees that anyone who has any kind of job at all after the program ends will show an improvement in average wages...
...Moreover, local sponsors achieve their best showings when they subvert the intent of a program aimed at the hardcore unemployed...
...It added that "a large proportion" of these jobs should go to the structurally unemployed, but it did not say how large...
...It was around 33 percent for black teenagers...
...The "new CETA" that Secretary of Labor Ray Marshall talks about is simply a swing back to (continued on page 27) THE PUBLIC POLICY (continued from page 5) the anti-poverty side...
...There are currently eight titles in the Act, but the growth areas in recent years have been the public service employment programs, Titles II and VI, which differ principally in the formulas they contain for dividing money among jurisdictions, not in the kinds of jobs for which the money may be spent...
Vol. 12 • August 1979 • No. 8
