Jonathan Cohn

Obama's Wacky, Possibly Immoral, Possibly Brilliant Jobs Proposal

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[Guest post by Matt O'Brien]

Last week, as the Obama administration rolled out its American Jobs Act, a liberal group called the Progressive Change Campaign Committee launched a strange ad campaign of its own: “[Obama economic advisor] Jason Furman wants you to work for free,” the ads blasted. The group’s rather pointed attack on an administration economist was in reference to a small proposal contained in Obama’s jobs plan called “Georgia Works.” The program, which gives the long-term jobless the option of continuing to collect unemployment benefits while receiving a modest stipend and serving a two-month “apprenticeship” with a firm, is being hailed by the administration as a novel solution to long-term unemployment that should be scaled up nationally.

The PCCC, however, is crying foul. “We need to put people back to work, not subsidize big corporations with free labor,” the group’s co-founder Adam Green told me. “It’s symbolic of the larger problem of putting the middle class last and big corporations first.” The outrage, of course, centers on the apparent heartlessness of effectively asking long-term unemployed people to work for peanuts. But beyond the dreadful optics of the program, it’s worth asking a simple question: Does Georgia Works work?

There are few worse legacies of the Great Recession than the plight of the long-term unemployed. Employers are often wary of taking a chance on those without the stamp of approval of a current job, while the skills of the unemployed deteriorate the longer they are out of work. The idea behind the Georgia Works program, in which participants work up to 24 hours per week in the hope of receiving a full-time offer at the end of the training period, is to reduce the uncertainty of hiring by letting companies test out a potential employee, in addition to teaching new skills to the long-term unemployed.

As Arthur Delaney of The Huffington Post reported, from 2003 to 2010 approximately 16 percent of trainees in the Georgia program stayed on at the firms they auditioned with, as compared to the 10 to 15 percent of long-term unemployed people who found jobs over a similar period. Even more promising, however, is the Georgia Department of Labor’s claim that nearly 60 percent of enrollees had a job within three months of finishing the program, which suggests that those who participated got a bump in employability. After all, filling in a resume gap is better than nothing. The appeal to policymakers is therefore clear enough: For scant additional spending, you get the prospect of making a dent in one of the gravest social ills plaguing our country.

Of course, there are still reasons to be skeptical. It’s unclear, for instance, how many of the aforementioned 60 percent of newly employed folks who went through the Georgia program actually found full-time, as opposed to part-time, work. And Mike Konczal, a fellow at the Roosevelt Institute, has noted that roughly 70 percent of the participants in Georgia Works found apprenticeships in low-skill positions that required little, if any, formal education. This preponderance of low-end jobs among Georgia Works trainees is possibly problematic, argues Jesse Rothstein, an associate professor of public policy and economics at the University of California at Berkeley, because forcing low-skill employees to compete against free labor has the potential to depress wages and allow firms to cynically churn through apprentices rather than fill a position. “It could turn what could have been a good job into a bad job or no job,” Rothstein explains.

But on the whole, provided that protections are put in place to preclude exploitative behavior, the consensus among experts seems to be that it’s an experiment worth trying. “As long as the program is voluntary and basic labor standards are maintained, there are no downsides,” says Rothstein. After all, if no one is being forced to participate, people will only join if they decide that that the combination of work experience and modest stipend is worth their time. Jared Bernstein, former chief economic advisor to Vice President Biden and current senior fellow at the Center on Budget and Policy Priorities, agreed, although he told me he would prefer to see the program first tested on a piloted basis to prove labor standards would indeed not be compromised. “It makes sense to provide on-the-job training for the long-term unemployed, but we have to be careful about potentially violating labor standards,” says Bernstein.

This hardly constitutes a full-throated defense of Georgia Works. There simply is not enough empirical evidence to conclusively say that it will ameliorate long-term joblessnessbut there is certainly a chance that it might. That seems like reason enough for progressives to leave Jason Furman alone.

Matt O’Brien is an intern at The New Republic.

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