The Corner

The Skills Act Is Not a Small-Government Policy

Today, the House will be voting on and likely adopting “legislation that would end or consolidate dozens of overlapping job-training programs to make it easier for job seekers to gain the skills they need.” It’s called the SKILLS Act, and the bill’s sponsor is Representative Virginia Foxx (R., N.C.). As the AP explains:

Obama, in his State of the Union address last year, said he wanted to “cut through the maze of confusing training programs” so people have a direct path to the help they require. That, Republicans said, is what their SKILLS Act does, eliminating or consolidating 35 federal programs and creating a Workforce Investment Fund that will act as a single conduit of support for employers and job seekers.

The bill is expected to pass Friday, but with few Democrats voting for it and the Democratic-led Senate unlikely to consider it in its current form.

Sounds good? Not really. After the SKILLS Act is passed, we’ll still spend a large amount of taxpayers’ money on jobs training — [the cost estimate is $26 billion through 2018] – we will just spend it on fewer programs than before the consolidation. Republicans are reducing the number of agencies, but not making the government smaller. 

Besides, since when is it the federal government’s job to train workers? And it’s not as if these programs are effective. Chris Edwards at the Cato Institute had a good analysis a year or so ago and concluded that they are inefficient and unneeded. He writes:

The government spends about $18 billion a year on these activities, with about half of the spending through Department of Labor programs.

A recent report by the Government Accountability Office (GAO) found that there are 47 different federal employment and training programs, with substantial overlap among them. More important, the report said that “little is known about the effectiveness of employment and training programs we identified.” That is remarkable—taxpayers have been funding these sorts of programs since the 1960s, yet federal auditors still aren’t sure whether or not they actually work. Various studies over the years have found that some programs may provide modest benefits, but others show no positive effects.

More fundamentally, federal employment and training programs don’t fill any critical economic need that private markets don’t already fill. Instead, the federal programs provide an opportunity for policymakers to show that they are “doing something” to help the labor market. To policymakers, federal job training sounds like something that should boost the economy, but five decades of experience indicate otherwise.

Even though millions of Americans have been out of work in recent years, relatively few of them have sought out federal employment and training services. Instead, individuals looking for jobs and training mainly rely on personal connections, the Internet, temporary help agencies, private education firms, and other market institutions.

This is not new. In fact, the GAO and others have been saying that for a while:

The GAO has been noting the dearth of positive findings regarding program effectiveness for many years. Back in 1996, the agency noted:

“Although the federal government spends billions of dollars annually to support employment training programs, little is known about their long-term effects on participants’ earnings and employment rates. Few training programs have been rigorously evaluated to assess their net impact, and, for those that have, the research results have often been inconclusive.”

The GAO’s analysis in 1996 found no statistically significant improvement in wages over the long term from participation in JPTA training programs. A decade earlier, the prestigious National Research Council came to a similar conclusion regarding federal job training programs for youth.

Edwards’s piece is here.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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