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Workforce Socialism
What Washington and Tallahassee Have in Store for Florida Businesses.

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The Following Article by Dr. Kimble Ainslie, of the Cato Institute, offers an excellent overview of how the federal Workforce Investment Act of 1998 undermines the free-market in the state of Florida. ALL 50 STATES are in various stages of implementing this same radical scheme to control the economy through appointed workforce boards.

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October 6, 2000
Gulf Coast Business Review

The Florida legislature recently passed the Workforce Innovation Act, 2000 which is supposed to address today’s leading business problem, the shortage and declining quality of labor. This summer, the state set up two new agencies to activate the legislation: Workforce Florida Inc., a policy board, and the Agency for Workforce Innovation, WFI’s administrative arm. These agencies are required by federal legislation if the state is going to receive 15 cent flow-through dollars coming from Washington, from a pool of $120 million this year. But this federal flow-through funding comes with a lot of strings attached, including a huge institutional apparatus and a host of bureaucratic programs and regulations that effectively stymie any useful attempt to address Florida’s workforce problems.

How did we get into this situation? The Clinton Administration apparently convinced the Republican 105th Congress to support a massive federal government intrusion into America’s labor markets. Then, the Governor signed a voluminous intergovernmental agreement giving state legitimacy to this federal intrusion, for which the Senate Republican leadership designed legislation to implement the whole thing. To follow up, senior corporate executives, aided and abetted by liberal-minded human resource managers and the Florida Chamber of Commerce, lined up behind our state leaders cheerleading on this exchange of labor markets for bureaucratic organization.

The federal legislation, the Workforce Investment Act, 1998, the mother of all workforce statutes, is enforced through the state workforce legislation putting into place such bureaucratic mechanisms as: state workforce investment boards, state strategic plans, local workforce investment boards, local strategic plans, local youth councils, youth strategic plans, on-stop training centers, and the list goes on. Once you get done with this organizational leviathan, the federal legislation then provides for the “delivery” of a host of programs on: adult education, dislocated workers, incumbent worker training, welfare-to-work, employment for seniors, vocational, and technical training.

The fundamental problem with this institutional and programmatic apparatus is it seeks to make redundant free markets in labor. It effectively obstructs and distorts ordinary market activities, and distracts the time and attention of Florida corporations in the hopes that something useful might happen. It usually does not.

On top of this, the State lays on programs giving direct training grants and credits to industries in the state and those relocating to Florida. One is the Quick Response Training (QRT) program; another is the Qualified Target Industries (QTI) program, both used as economic development give-aways. The specific industries targeted for grant money under the QTI program are aviation/aerospace, health and information technologies, plastics, and engineering simulation. If you’re not in one of these sectors, you lose, and you lose with your own tax dollars spent on other businesses. And, you’re a big loser if you run a small-scale service business, like a computer service business or restaurant or a professional firm, because then you are guaranteed not to be eligible for any QTI money; assuming you could use or wanted the assistance.

At the local level, a whole new layer of market obstructions rise up in the guise of local/regional workforce development boards, which sit like great Buddha’s in the middle of the road preventing private sector initiatives from getting around them. Take for example, the Florida Center for Manufacturing Excellence (FCME), a private sector training initiative started in 1998 and at that time serving Sarasota, Manatee and Taylor counties. (See The Review, Dec. 11, 1998) After 10 months in operation, the plug got pulled on this innovative and inexpensive industry training project. Why?

Community college vo-tech administrators politically undermined it with the Suncoast Workforce Development Board. Then the Suncoast workforce board "damned it with faint praise" in a reapplication bid to the state. A Senate staff bureaucrat, with the approval of Sen. Jennings, arbitrarily carved out the program from a budget line and justified his action by saying he was removing a "non-tradition" initiative. This "non-traditional" initiative, of course, came from the private sector, the very folks the state is supposed to be assisting.

The problem really goes deeper. Federal legislation effectively designates community colleges as the primary administrative and delivery agencies for workforce training. Since vo-tech college administrators are not inclined to share their turf with any other groups, least of all private sector training schools or business coalitions, competing groups are kept at bay.

Thus, at the center of this "educracy" is a vo-tech administration that serves its own institutional interests first. When the colleges put on courses, they are designed to fit the established nine- to 10-month school year. But most industry training can be undertaken in one-third that time duration and at a lot less cost - FCME charged 20% less for training than the community colleges. In addition, community college courses are often designed to suit the instructors’ preferences and knowledge, which just as often are not industry-based. And some courses the colleges pawn off on industry are really just unfilled classes in residual program areas, where colleges try to complete their "full-time equivalent" state funding requirements.

The workforce problem is a serious business issue in this state, and given current organizational and programmatic arrangements the state has a long way to go to assist the needs of business and industry. Perhaps the first step toward some truly productive response would be for the state to "privatize" the whole effort. This would mean staying out of the business of managing labor markets, and allowing private technical colleges to respond directly to the requirements of business.

If a state role is absolutely necessary, then the legislature ought to offer tax credits to industry and commerce to train workers in private technical colleges, on the condition that matriculating students have job prospects available to them upon timely graduation.

Right now, almost all the focus in training is on satisfying the preferences of individual students and their career aspirations without any real connection to the number and kinds of jobs available. Who best to determine what training is required than those who post the jobs? So let’s put the focus on business demand not individual preferences in determining where workforce tax dollars are spent. Training people for occupations without jobs is counter-productive. If we move to a business-centered approach on training, we’ll get jobs filled, people employed and eliminate the unnecessary bureaucracy.

By Kimble F. Ainslie
Senior Research Analyst
James Madison Institute, Tallahassee
Reprinted with Permission

(c) 1999 Gulf Coast Business Review. For permission to copy and distribute this article, contact the Gulf Coast Business Review, Bradenton, FL.

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