Knock, knock … anyone paying attention to the Workforce Development Fund?

Knock, knock … anyone paying attention to the Workforce Development Fund?

by
Wayne Hoffman
December 3, 2013
Wayne Hoffman
Author Image
December 3, 2013

If a company were to receive taxpayer subsidies and then close, you’d think there would be some kind of reaction. Maybe an inquiry. Or a spark of pretend outrage, to make it appear as if there’s a modicum of concern about the money you and I are forced to spend to subsidize businesses that later close.

And yet, once again, another Idaho business is closing and no one seems to be fussing at all about it. A legislator or two who definitively commit to the possibility of perhaps considering the idea of holding a meeting. “We should look into it,” the politicians tell us.

Our newest government-funded failure is the H.J. Heinz plant in Pocatello, which just announced it will be closing next year. The closure will cost at least 400 jobs. According to records from the Department of Labor, the state has given Heinz more than $800,000 in subsidies to help train 454 workers since 2003. The money came from the Idaho Workforce Development Fund, which is fueled by Idaho businesses through a portion of their unemployment insurance taxes.

This is not the first time a company grabbed a government handout and took off. Nor will it be the last. Not long ago, Hoku, another Pocatello business venture partially funded by the government, announced it would mothball its Idaho operation before it even got rolling, costing taxpayers more than $651,000 in workforce training funds. We’re lucky this time though; another $950,000 had been committed.

It’s not as if these investment failures couldn’t be foreseen. After 16 years and more than $62 million of funding, the Idaho Department of Labor finally put together a report showing the program had an effectiveness rate of just 40 percent.

Defenders of the program contend that failure is overstated; after all, a trained employee can always take that training to another job, they say. Of course, if that were the case, you’d wonder why the government doesn’t just let businesses decide to allocate money for training on their own accord.

The reasons are simple:

First, lawmakers and, indeed bureaucrats, like to be able to “award” money to businesses. It helps to demonstrate their commitment to local companies. A politician can’t very well put out a press release that says, “Jim’s Fly Swatter Emporium spends $1,000 on employee training” when that politician has nothing to do with Jim’s decision to invest in his employees. Indeed, businesses invest in, and spend money every day on, their employees. Without the government being involved at all.

Second, as much as it claims it’s not true, government doesn’t trust that companies will invest in employee training. So it will take money from us—and from you and me—and give it someone, with the promise that such money will go to the use deemed appropriate by government, in this case, employee training.

Third, government programs beget campaign contributions. If politicians are able to support programs that result in a little money getting sprinkled around, it helps to guarantee a return on investment come election time.

The Workforce Development Fund takes money from people who earned it and gives it to people who have not. That’s a crime in and of itself. The unmitigated failure of the program deserves more than a half-hearted “we should look into it.”

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