State job program becomes a model

By Tammy Joyner

The Atlanta Journal-Constitution

Long before this recession decimated the job market and drove unemployment to record highs, a little-known Georgia program was quietly putting people back to work through an innovative use of unemployment benefits.

Now, with many states running out of unemployment funds and desperate for ideas, the Georgia Works program is gaining national attention. Dozens of state officials seeking to replicate the program have contacted the Georgia Labor Department in recent months, while Washington policymakers have christened it a national model for job creation.

The idea is simple: Pair people collecting unemployment with a company at no cost to the employer. The worker continues to get an unemployment check plus a small stipend, as well as job training that, it’s hoped, will lead to full-time employment at the company or elsewhere. Since it began seven years ago, nearly 8,000 people have completed the program, with about half finding full-time work afterward.

The program pays up to $330 in unemployment a week for six weeks of training, plus a weekly stipend of about $100 to help with gas, transportation and other incidentals. Georgia labor department officials say the program gets workers off unemployment rolls faster, thus saving unemployment benefit costs in the long run.

“It’s getting a whole lot of interest,” said Don Peitersen, project director for the American Institute for Full Employment, an Oregon nonprofit and advocacy group that advises states on employment issues. Peitersen learned about Georgia Works about 18 months ago and has been encouraging other states to create similar programs.

“We’ll steal a good idea anywhere we can find one,” joked Larry Temple, executive director of the Texas Workforce Commission.

The Lone Star State recently created the Texas Back to Work Initiative. Under the program, employers get a $2,000 wage subsidy for hiring and training qualified unemployed workers. Participation is limited to people who once earned less than $30,000 a year. So far, about 1,000 people and 300 companies have taken part, and most participants have found jobs within six weeks of completing the program, Temple said.

Hawaii and Missouri also are getting ready to adopt a form of Georgia Works, while Nevada and New Hampshire are looking seriously at the program.

Program under fire

While the Georgia-grown strategy has drawn a lot of national interest, it has also drawn criticism. Some unemployed workers view the training program as little more than “slave labor”: It has them working for slightly more than their unemployment pay, and disillusioned to find that full-time work after training isn’t guaranteed. Some policy analysts, meanwhile, question whether it might circumvent federal labor laws.

At a recent job summit hosted by the state Labor Department, several small business owners said they’d had trouble getting and keeping trainees through Georgia Works.

“I’ve had five or six people from Georgia Works who wouldn’t do the job,” said Sandra A. Gresham, who runs Arms of Love, a nonprofit near downtown Atlanta that provides groceries and other services to those in need.

Several of the people had lost jobs paying $80,000 to $100,000 a year, Gresham said, and they told her they couldn’t work for so little money: “It’s enough to barely pay bills or put gas in the tank. They can’t afford to do it.” Gresham said other would-be participants have tried to pressure her into hiring them full-time even though the six-week training program offers no guarantee of employment.

“They’re telling me that it’s slave labor or volunteer work,” she said.

Labor Commissioner Michael Thurmond concedes Georgia Works isn’t for everyone. Those who choose not to participate aren’t penalized, nor do they lose their unemployment benefits.

“Georgia Works gets your foot in the door. It’s voluntary. Anyone who doesn’t feel comfortable doesn’t have to do it,” said Thurmond.

Because the program is voluntary, it does not violate federal wage and hour laws. But the National Employment Law Project in New York disagrees with that interpretation.

“We reviewed Georgia Works. It looks more like work than training,” said NELP deputy director Andrew Stettner. “You can’t try someone out and not pay them. It’s not allowed under our nation’s labor laws.”

Moreover, Stettner said, “If a lot of businesses can bring in a lot of people” essentially working for free, “somebody else [working full-time] isn’t getting an extra shift or extra work hours.”

Other options available

Stettner said there are other programs that could address what Georgia Works is trying to do. Since welfare reform, states have more flexibility to use their welfare funds to create jobs. He also cited other job-creation initiatives. Last month, for instance, President Barack Obama signed into law the Hiring Incentives to Restore Employment, or HIRE Act, which gives tax breaks — including a payroll tax holiday — to employers who hire unemployed workers.

“I think people do want to get back to work and do want to get their foot in the door,’’ Stettner said. “But you need to do it in a way that protects other workers in the workplace and also protects the unemployment fund.”

Thurmond insists Georgia Works is doing what it set out to do.

“It’s cost effective,” Thurmond said. “This is a strategy that uses existing resources to generate jobs.”

Finding solutions for such thorny problems isn’t new to Thurmond, who announced last week he’ll run for the U.S. senate this fall. He successfully guided Georgia through the hairpin curves of welfare reform and spent the past decade retooling the state labor department into a more efficient system for the unemployed. It was shortly after the 2001 recession ended that he devised Georgia Works as a matchmaker of sorts for the unemployed and employers.

Through Georgia Works, laid-off workers have trained in occupations including press operators, legal assistants, customer service representatives, interior designers, auto body technicians, medical assistants and grant writers. Originally created for unemployed people who hadn’t found jobs and were facing the end of unemployment benefits, the program has been expanded because more Georgians are facing longer periods of unemployment.

An outdated system?

As of the end of March, more than 30 states, including Georgia, have had to borrow nearly $39 billion from the federal government to pay unemployment benefits, according to NELP. More states are expected to find their own insurance coffers drained this year. The federal Labor Department projects that as many as 40 states could be insolvent by the end of 2013, requiring loans of as much as $90 billion.

With the U.S. unemployment rate at 9.7 percent, the 75-year-old unemployment insurance system — the main safety net for generations of unemployed workers — is buckling under the strain of providing temporary financial help for 15 million unemployed Americans, many of them long-term. In Georgia, 40 percent — roughly 204,600 — of the unemployed have been out of work more than six months. Georgia’s unemployment rate rose to 10.6 percent in March.

The federal unemployment system was created in 1935 mainly to see factory workers through cyclical, seasonal or brief periods of job loss. It has remained relatively unchanged even as the U.S. work force has moved from a manufacturing to service-based economy. And it has never had to deal with an economic downturn as punishing to American workers as this one.

Thurmond sees Georgia Works as an answer to an outdated federal system. Earlier this month, Congress passed what Thurmond believes may be the last in a series of extensions of unemployment benefits. With growing public opposition to more unemployment extension as a way to address chronic unemployment, states are going to have to come up with their own answers to the problem.

“It’s really a re-envisioning of the 20th-century program for a 21st-century problem” Thurmond said of Georgia Works. “It’s self-empowerment. You can sit around and wait for Washington or the Federal Reserve or the Georgia Legislature to create a job for you, or you can create one for yourself. You’ve got to rescue yourself.”

About Georgia Works

Created: March 2003

Companies that have participated in the program since it started: 8,099

People who have completed the program since it started: 7,823

People hired during or by the end of their training period: 3,669

Percent of participants hired: 48.9

Estimated savings to Georgia’s Unemployment Insurance Trust Fund: $6.4 million*

Estimated savings to Georgia employers: $16.8 million**

States that have inquired about Georgia Works: 24

* Accomplished by getting unemployed workers back to work quicker.

**Money companies don’t have to spend to train or hire workers.

Staff writer Bob Keefe contributed to this article.