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Report shows problems with workforce training program

Report shows problems with workforce training program

Wayne Hoffman
October 22, 2012

The state Department of Labor is finally asking some of the right questions — questions that should have been asked long ago — about Idaho’s Workforce Development Training Fund.

The tax-funded program, which the Legislature created in 1996 and gleefully reauthorized just a couple of years ago, is available to companies for the reimbursement of training expenses for jobs paying at least $12 an hour with employer-subsidized health care benefits. But one of the things taxpayers should want to know for any program is whether that program actually does what it is supposed to. And the state government has known very little about the program that has paid out almost $30 million to cover the training of 17,700 workers between 2000 and 2009.

A new report produced by the department answers the question: “The effectiveness of the fund was mixed over the decade analyzed. The fund was most effective in the information, financial services and business management services sectors and least effective in construction,” says the department’s report. “Applying that performance index to the 160 individual contracts in effect from 2000 to 2009, 63, or 40 percent, were rated effective and 52, or 33 percent, were rated in effective. Scores for the rest were inconclusive concerning the real effectiveness of the training subsidy.”

Not a glowing result, in my opinion.

And while this next nugget of info represents about 2 percent of the program and less than $800,000 in expense, the report notes, “there were 404 individual workers claimed by 101 companies for which department records show training reimbursement was made, but no record of those individuals working during the period of training or during the two years after training could be found. At least some of those instances could be the result of typographical errors in recording the Social Security numbers.”

Still, Labor Director Roger Madsen applauds the fund and its supposed impact, saying via press release, “This program has proven its worth by enhancing the skills of Idaho workers so they can compete in an evolving technical and global economy. It’s been one of Idaho’s most valuable economic development incentives for more than a decade.” The report notes that over time, employees who received government-subsidized job training saw their wages go up faster than unsubsidized private sector employees.

Even if this program were brimming with positive economic news, and overall, I’d say it is not, let’s be clear on what this program is: it is a vehicle for wealth redistribution and government-driven economic engineering. Businesses fund the program with a tax, and then those tax dollars are given to businesses for the utilization of the money to benefit other employees in other businesses.

Contrary to what Madsen says, I’d consider the workforce training fund to be a drag on the economy. There are no reports, and never will be, to indicate how much money companies would have spent on their own professional development and workforce training minus government intervention. But now they don’t because they’re forced to give that money up to the government.

Nothing compares to the free market when it comes to business and workforce training incentives. But lawmakers prefer to institute programs, at taxpayer expense, rather than rely on free markets. But now that we know what an underperformer the Idaho Workforce Development Training Fund is, hopefully state lawmakers will begin asking their own questions about which approach is best.

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