Greater Greater Washington

Posts about Job Training

Poverty


DC job assistance claims take credit for federal program

Last December, Mayor Vincent Gray announced that a centerpiece of his administration, One City One Hire, had helped over 5,100 unemployed DC residents find jobs. According to a former official at the Department of Employment Services, this figure includes every DC resident hired under the federal Work Opportunity Tax Credit program.


Photo by khalilshah on Flickr.

A One City One Hire briefing document that was presented to the mayor last December shows that 30% of the 5,100 hires were made through this federal program.

Officials from the Department of Employment Services (DOES) say that it is fair to take credit for these hires, because they are educating employers on the availability of the federal tax credit. However, a spokesperson for Atlanta Mayor Kasim Reed, whose Hire One Atlanta program was the model for Gray's initiative, said they do not include all hires made with federal tax credits in their metrics.

One City One Hire metrics are important

One City One Hire is a initiative of DOES that matches work ready DC residents with jobs.

DOES encourages unemployed DC residents to enter their resume into the One City One Hire web site. DOES staff then proactively engage "hiring partners" to consider qualified applicants from their system while informing them of available hiring credits.

The program makes sense, as I explained last year while praising Gray for One City One Hire. Often employers don't consider unemployed DC job applicants because of stereotypes about their work readiness. It makes sense for DOES to step in and vouch for truly work-ready DC residents.

Furthermore, Gray set a goal for DOES to place 10,000 jobless DC residents into jobs through One City One Hire. Achieving that goal would make a real dent in DC's jobless crisis, which exceeds 20% unemployment in parts of the city east of the Anacostia River.

Relying only on matching work-ready individuals with jobs would likely be insufficient to reach this goal. As a result, reaching this goal would require reform of DC's workforce development system that removes barriers to employment for those who are not work-ready.

A former DOES official, different from the former DOES official who provided the One City One Hire briefing document, provided documents previously to Greater Greater Washington that show that few job seekers are getting the intensive services they need from DOES to become work-ready.

DC claiming credit for federal program, Atlanta is not

By allowing One City One Hire to claim credit for hires by employers with whom DOES has no relationship, however, the Gray Administration is more likely to achieve it's goal of 10,000 hires without making a significant dent in unemployment or reforming DC's workforce development system.

The Work Opportunity Tax Credit is a credit that employers receive on their federal payroll taxes when they hire certain classes of individuals. Unemployed veterans, unemployed ex-convicts and long-term welfare recipients are included in the program.

The Washington City Paper first reported in January that a senior DOES official claimed many of the hires attributed to One City One Hire were simply hires that resulted in a WOTC tax credit. The official said at the time, "These programs are doing the same things and getting the same results."

Mayoral spokesperson Pedro Ribeiro defended claiming credit for these hires because WOTC "is a tool that states use." Through One City One Hire "we use tax credits, reimbursements, and all kinds of other tools to get folks employed."

According to interim DOES Chief of Staff Liz DeBarros, "When we came into office, there was a 2½ year backlog in processing WOTC requests through DOES" and there was insufficient "education of employers that it was available." DOES under the Gray administration is now educating employers on WOTC and processing requests more quickly.

She said that it's fair, as a result, to claim credit for all hires that resulted in a WOTC tax credit for the employer.

Atlanta Mayoral spokesperson Reese McCranie, however, said that the Hire One Atlanta program on which One City One Hire was modeled does not include all hires that resulted in a WOTC tax credit for the employer.

Employers who partner with the City of Atlanta self-report their hires of unemployed Atlanta residents to Hire One Atlanta, and the Society for Human Resource Professionals provides 3rd party validation of the hires.

Mayor Gray has been criticized for announcing more goals - around sustainability, economic development, education - than accomplishments. Greater Greater Washington contributors have defended the mayor's practice of setting goals, because goals matter. They allow for accountability that leads to reform.

But that assumes that the metrics used by the Gray Administration are fair and measure what everyone assumes they are measuring. But that's not always happening.

Gray set a goal of universal pre-k availability, for example, but then permitted a formula for calculating availability that will always show universal availability. One City One Hire is also using a metric that is biased in favor of showing progress towards the goal of the program.

Goals matter, but only if the metrics are fair. That's why the Gray Administration should be explicit about how it measures progress towards each of its goals.

Poverty


Few job seekers get the intensive training they need

Large numbers of DC's jobless residents are going to the city's One-Stop Centers for employment assistance, but very few actually receive the intensive services that they will need to compete for jobs, say internal workforce training documents obtained by Greater Greater Washington.


Image by Intersection Consulting on Flickr.

In order to get job training from the DC government, one has to request training at a One-Stop center run by the Department of Employment Services (DOES).

A former DOES manager sent along a training manual which highlights a problem in the job training system: job seekers have to pass through many administrative steps to get services, but high attrition rates at each stage mean that few ultimately get services like literacy training or skill development.

While unemployment in the Washington region is relatively low, in low-income parts of DC such as Ward 8 it exceeds 20%. Given that only 28% of jobs in DC are held by DC residents, high unemployment of DC residents is generally attributed to obstacles to employment like lack of literacy and job skills.

Allison Gerber, executive director of the Workforce Investment Council (WIC) which has oversight of services of One-Stops, reacted to the numbers. "Assuming these numbers are correct," she said, "they are very similar to the gaps that the WIC found in the last program year."

DOES Director Lisa Mallory disavows the numbers in the training manual, saying they were pulled by a previous Associate Director for Workforce Development, Dr James Moore, and are "incorrect." Mallory referred to "coding" issues, and said that the number of services provided like occupational and GED training were actually much higher.

Mallory agreed, however, that attrition is a central problem in the delivery of workforce development services, and said her investment in training to address this problem demonstrates that she is tackling the problem by transforming DOES.

What happens when jobless residents approach DC for help?

15,781 adults approached DOES One-Stops over the last Program Year (July 1, 2011 to June 30, 2012) requesting help with employment. Assuming these were all DC residents, that would be about 30% of the roughly 50,000 unemployed DC residents.

The figures in the report suggest that most are receiving basic services, such as use of a computer to look for jobs or resume assistance. DOES refers to such basic services as "core services," and refers to services like literacy, adult education and occupational training as "intensive services."

Of the 6,352 enrolled in core services, 4,004 received "initial assessments," 3,919 received "resume assistance services" and 3,594 received "referrals to workshops." 2,284 get referred to intensive services, but of these, only 21% (477) actually enroll in intensive services.

Among the 477, 430 express interest in occupational training. The One-Stops approve 77% (322) of these requests, and forward their application packets to the Office of Program Performance Monitoring (OPPM) in DOES. But OPPM only approves 32% of these (104) for training, a $4,000 Individual Training Account (ITA) program funded by the federal government and DC government.

The consultant DOES commissioned to train their management, Greg Newton Associates, identifies this attrition problem in the training manual as low "conversion ratios" and then asks the question, "What needs to be improved?"

Few residents receive literacy training or evaluations

The manual also shows a low percentage of job seekers at the One Stops receive literacy or adult education services. More than 80,000 DC residents, making up 19% of adults, lack basic literacy. Approximately 55,000 lack a high school diploma.

The unemployment rate for residents without a high school diploma or GED is 19%. However, less than 1% (33) of the unemployed enrolled in the core services of DC One-Stops (6,352) receive literacy or adult education services.

In fact, only 6% (379) of the 6,352 unemployed enrolled in core services are even tested for lack of literacy and numeracy skills.

Mallory challenged these numbers as well, claiming that "we had about 200 individuals referred for GED training."

Why is the attrition rate so high?

There appears to be a high attrition rate in two places: first, in the One Stop, and second, where the Office of Program Performance Management evaluates job training requests after a One Stop approves a request.

Attrition within the One-Stops is sometimes blamed on the jobless residents. In an interview last year, former director of the DOES One-Stops Hugh Bailey said that "One-Stop staff are not case managers. Lots of people come into the One-Stop and expect to leave with a job."

"All we can do is give them the tools to find a job," said Bailey, "but we aren't case managers."

However, the Newton manual pointed to strict adherence to a wasteful process as the cause of low One-Stop "conversion rates." The manual called for DOES staff to transform into lean providers of services that meet all customers where they are at.

OPPM approves less than a third of job training requests

The workforce development community has worried for years about the low percentage of job training requests DOES approves, even after they go through a first stage of approval at the One-Stop centers. The training manual says that only 32% of requests get the go-ahead from OPPM.

An annual report of DC's workforce development efforts sent to the federal Department of Labor last year admits to "internal delays in transitioning participants into training services."

An October 2008 report by Callahan Consultants observed that "the process itselfwhich includes required return visits to the One-Stop for eligibility determination, for testing, and for submission of vendor acceptance letter, etc is being used as a screening mechanism to ensure clients are truly motivated to go into training."

Marina Strewnewski, executive director of the DC Jobs Coalition, a coalition of job training providers, says that her members report an average of 90 days waiting for DOES to approve training requests. According to Strewnewski, "this absolutely discourages unemployed job seekers, who eventually disengage from the DOES process out of frustration."

Director Mallory asserted, however, that "OPPM is not an impediment" to delivering training services. Mallory pointed to several "factors that may play a role in delaying the the approval of the training request."

These included:

  • "lack of certification documentation (proof of residency, Social Security Numbers, Citizenship, etc.),"
  • "Provider unable to start classes due to not enough customers approved for the program to schedule a class," and
  • "Customer undecided and/or loss of interest."
Officials are trying to streamline the process

Gerber, of the Workforce Investment Council, explained that the WIC has been pursuing a "one-stop certification process" that would establish policies and procedures focusing on delivering services that jobless residents need to be work ready instead of focusing on paperwork.

Gerber stressed that this is a collaborative effort with DOES, and the multiple working groups with DOES management have made good progress. Once the certification process is in place, the WIC could then de-certify One-Stops that fall short of the new standards.

Delivering more core services, focusing on matching work-ready customers with a job, is an achievement for which DOES deserves much credit. The improvement in these services reflects the investment in One City One Hire, which matches jobless DC residents with job openings.

However, our focus on job matching must also go hand in hand with a focus on work readiness, given the tremendous mismatch between jobs in the DC area and the skills of jobless DC residents.

Poverty


Bike lanes and jobs are not mutually exclusive

Bike lanes have lately become a proxy for all things that benefit affluent residents. But juxtaposing bike infrastructure with a program like job training distorts reality, because bicycle infrastructure costs a miniscule amount compared to job programs, and actually helps poor residents gain better access to jobs.


Photo by Tuaussi on Flickr.

Last week, Washington Post columnist Courtland Milloy took aim at what he characterized as the District's neglect of jobs for impoverished residents at the expense of initiatives he perceives as aimed at those who are more affluent:

This month, D.C. Mayor Vincent C. Gray (D) unveiled an economic development plan that he says will create 100,000 jobs and generate $1 billion in tax revenue over the next five years. But who will get those jobs? D.C. residents hold less than 30 percent of the jobs in the city, and readiness programs tried so far just haven't worked.

But what if the city got as serious about creating jobs as making bike lanes?

The problems of inequality and disparate economic opportunities are very real in DC, where a sizeable portion of the populationlargely long-term African-American residentsdo not seem to be benefitting from the city's so-called renaissance. Unemployment east of the Anacostia River remains significantly higher than in other parts of the city, and development that has transformed many areas of DC has been slow to reach its more impoverished areas.

Understanding the size and scope of this problem, inquiring why it persists and searching for meaningful solutions are worthy pursuits that all seeking to create a more livable city should support.

However, pitting jobs against programs like bike lanes is divisive, putting a bogeyman that supposedly symbolizes the city's misplaced priorities ahead of real issues. There's little evidence to support the idea that the District is pursuing initiatives such as bike lanes at the expense of jobs and social welfare programs.

Far more money goes into job programs than bike lanes

The District's FY2012 budget allocated $126 million to the Department of Employment Services (DOES). DOES' purview includes programs such as adult workforce programs, transitional employment, local job training and the controversial Summer Youth Employment Program (SYEP).

Many of these programs fall within the Workforce Development division, which "provides employment-related services for unemployed or underemployed persons so that they can achieve economic security." Workforce Development alone saw more than $55 million in the FY2012 budget.

Meanwhile, the District's Department of Transportation (DDOT) commands a 2012 capital budget of $128.1 million, which covers a vast array of responsibilities relating to the planning, construction and upkeep of the District's roads, bridges, trails and more. Separating out the amount spent specifically on bike-related infrastructure is practically impossible, and DDOT did not reply to an inquiry about these figures by publication time. However, some information is available.

DDOT's budget allocates $5.17 million "Mass Transit," which includes funds for programs such as bike sharing, car sharing and planning other alternative transportation options, while an additional $5 million is dedicated to planning and policy, which include pedestrian and bicycle programs and designing bicycle infrastructure.

Combined, this roughly $10.2 million, which constitutes expenses on far more than simply bike-related programs, comprises approximately 8% of DDOT's budget. (It would also represent a similar percentage of DOES' budget, and less than 1/5th of the amount spent on Workforce Development.)

The actual construction cost for bike routes and lanes throughout the District is minuscule, according to the District's Bicycle Master Plan. This is because DDOT constructs most bike lanes or routes as part of larger streetscape and repaving projects, which minimizes bicycle-specific costs.

According to the master plan, the total cost of construction and signage of all new bike routes and lanes between 2005-2015, which encompasses well over 100 miles of routes and lanes both east and west of the Anacostia, is only $420,000.

By contrast, the District budgeted $1.57 million in 2012 alone on reduced WMATA bus fares for impoverished residents east of the Anacostia. In other words, as a portion of DC's overall $9 billion budget, costs assignable specifically to biking and bike-related infrastructure make about as much of a dent in the District's budget as the cost of refreshments served at Council meetings. (OK, perhaps that's a bit of hyperbole, but you get the idea.)

One may argue that what the District is investing into job training and placement services for its more poverty-stricken communities is insufficient, and that it needs to make a greater effort to ensure that District residents can find work at many of the businesses moving into the city.

Or, perhaps one might ask why, with hundreds of millions of dollars having gone to DOES in recent years, the unemployment rate remains so stubbornly high? (Unemployment was 26% in Ward 8 in 2011, nearly twice as high as the highest ward west of the Anacostia (Ward 5) and 13 times greater than the District's most affluent ward, Ward 3.)

But these aren't the types of questions Milloy raises. He implies that poverty and income inequality remain persistent throughout the District in part because the local government is fixated on initiatives such as bike lanes that are supposedly focused on affluent residents at the expense of jobs programs for its needier residents. "Jobs, not bike lanes," he says.

Jobs and bike lanes are not mutually exclusive

Robust and well-funded job training and placement assistance programs are not incongruous with progressive transportation options such as bike lanes, streetcars, subways and buses. In fact, one might argue, the two actually go hand in hand. As the District's roads become more choked with traffic, and as the price of gasoline and the overall cost of car ownership continue to rise, developing more cost-efficient transportation options is a tremendously sensible policy.

For example, with its annual membership fee of $75 and stations throughout the cityincluding more than a dozen east of the AnacostiaCapital Bikeshare is a very cost-effective method of navigating the city. It's also environmentally friendly and physically beneficial.

The growing presence of bike lanes and routes, including many miles east of the Anacostia, along with bike parking options throughout the city, make commuting to and from one's place of employment on two wheels an attractive and convenient option.

Rather than question why the city is devoting any resources to bike lane construction, a better question would be why the city's existing job training and placement programs are ineffectual. And rather than perpetuating the fallacy that the District has to choose between these two, all residents should support a city that has both smarter, sustainable transportation options and innovative and effective job training and placement options at the same time.

Government


Let's attract companies with our workers, not with subsidies

DC has grown its private sector by investing in urban amenities that attract a 21st century workforce. Other states simply give companies direct subsidies to attract them instead, providing little external benefit. But the DC Council is about to do exactly that, by giving LivingSocial a $32.5 million location subsidy with few strings attached.


Photo by Sweeter Alternative on Flickr.

DC's sizable, hard-fought investments to create a livable, walkable city that attract top tier workers have benefited few firms as much as LivingSocial. Talented young people want to live in DC, and LivingSocial has been a major beneficiary, as have dozens of tech start-ups across the city.

The proposed LivingSocial deal, however, is not an investment in attracting a workforce. It's just a location subsidy. That means they don't have to grow, they just have to stay here. DC could use this money to invest in more development that attracts "creative class" workers like better retail, arts, transportation, and the actual growth of tech companies.

DC tech firms benefit from DC's investments in the creative class

The District didn't just suddenly become an attractive place for talented young people to live. That transformation took years of investments, often at the expense of other priorities. DC is still making these investments, and needs to keep funding them.

Buying more Circulator buses and streetcars and operating them on more routes is costly. Building more cycle tracks and multimodal streets requires money. Renovating more schools, extending library hours, and investing in mixed-use development projects like St. Elizabeths and Walter Reed is expensive but critical to attracting and retaining a world-class workforce of knowledge workers.

The payoff from these investments is that DC has experienced the largest domestic population growth of any state, and the fastest growth of creative class jobs of any large metropolitan area. Creative class workers are the knowledge workers in demand by many of the fastest-growing companies, including tech companies like LivingSocial.

That's why just over half of LivingSocial's employees already live in DC, whereas 30% of employees at other DC employers live in DC. LivingSocial isn't hiring them for charity, they're hiring because DC residents are excellent employees. This is a fact that's widely recognized, every DC tech company I know hires DC residents in at least half their positions.

One investment that would grow our workforce of knowledge workers to have LivingSocial grow further. DC could invest in LivingSocial's growth, but is instead offering $32.5 million for LivingSocial to simply stay in DC. They don't have to actually add any new positions to get this money.

That approach to attracting and retaining companies, known as location subsidies, is practiced by states who can't offer a 21st century workforce because they haven't invested in one.

Richard Florida, whose book The Rise of the Creative Class has shaped urban development strategies for a decade, opposes a location subsidy for LivingSocial for the same reason:

I am fan of high-tech companies and very much like what LivingSocial does. But they are already leveraging the enormous historic investments made in DC over decades to become an attractive city with extraordinary quality of place that attracts highly skilled creative class workers. They don't need the subsidy and our cities and states need to put a stake in the ground and stop this corporate welfare. I doubt they'll leave the region anyway. Where would they go?
The DC Council should demonstrate the same faith in DC's ability to attract companies for the right reasonsour 21st century workforceas Florida does. They should require LivingSocial to add jobs, particularly product development jobs that attract creative class workers, in order to receive a subsidy.

Chicago required job growth in return for Groupon subsidy

Groupon, LivingSocial's primary competitor, did not a get location subsidy from Chicago. Instead, Chicago offered Groupon $3.5 million on the condition that Groupon add 250 new jobs.

If the LivingSocial subsidy were similarly structured, DC would see 2,321 new jobs at LivingSocial in return for its $32.5 million subsidy.

Furthermore, Chicago's subsidy to Groupon is in the form of income tax and training credits. That ensures that Chicago doesn't subsidize a company that is losing money and perhaps about to go bankrupt.

$15 million of the proposed LivingSocial subsidy is in the form of property tax credits, which it receives whether it makes money or not and could receive right before a bankruptcy.

Why should the DC Council give LivingSocial a far better deal than Chicago gave to Groupon? The DC Council should only provide income tax credits to LivingSocial, or at least limit an annual property tax credit to the size of its income tax credit.

Let the DC Council know that we can't afford location subsidies at the expense of crucial investments to build a city that attracts a 21st century workforce. LivingSocial should have to add jobs, particularly product development jobs, in order to receive a subsidyjust like Groupon did. This will ensure the continual contribution of LivingSocial's growth to DC's rise as a creative class hub.

Take action

Should the DC Council require new jobs in the LivingSocial tax break? Reject it entirely? What do you think? Tell the DC Council.

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Transit


Metro closing Red Line for 8 months to accelerate repairs

This article was posted as an April Fool's joke.

Metro will suspend all service on the Red Line for the next 8 months to allow repair crews to finish work on the line more quickly. Shuttle buses will replace trains between Shady Grove and Glenmont.


Photo by ElvertBarnes on Flickr.

According to Metro spokesman Stan Dessel, Metro is tired of the constant weekend track work. "Frankly, we're just as sick of the slow trickle of repairs as the customers are. We decided it would simply be faster to just fix everything at once," Dessel said.

Dessel said customers should also consider alternative commuting methods, like driving. Customers who drive or take the shuttle buses should expect to add an additional 60-120 minutes to their travel time.

Riders from Shady Grove can also drive to Vienna and take the Orange Line.

Governors Bob McDonnell and Martin O'Malley announced plans to spend $10 billion to build a new freeway across the Potomac River in order to accommodate the Metro riders, but added that funding is too scarce to contribute more to speed up the Metro repairs. "We think this is the best way to use our state transportation dollars to help commuters," said Virginia Secretary of Transportation Sean Proaughton.

In addition, MARC will add new service on the Brunswick Line. CSX announced that it would allow MARC to run more trains and actually tell its dispatchers to give priority to passenger trains on the line, as opposed to previous times when they claimed to have done so but dispatchers did not actually follow through.

Metro is launching a new public relations campaign around the closure, called "Red Line: Deal With It." Customers will see construction walls at Red Line station entrances with slogans like, "8 Months Isn't So Bad, Is It?" and "No More Delays. No More Red Line."

Organizers of large national events are also being informed. A national tea party convention has already modified its website to inform attendees driving to the region from points north on I-95 to take the Beltway to Vienna instead of driving to Glenmont or using any other station.

Metro will suspend all work on other lines, including Silver Line construction, in order to complete the work in 8 months. "We hope that by the time the Red Line reopens, we'll only have to single-track twice a month," said WMATA CEO Richard Snarles.

Dessel said Metro is working with Mayor Gray to hire thousands of unemployed District residents to help with the 24-hour repairs. The program is part of a new employment program called "One City, One Line."

A social media component of the program, called "Metro Fast Forward," will equip track workers with helmet video cameras and editing software so that they can produce videos of the work in real time.

This concept has actually been in the works for over a year. Previous WMATA spokesperson Lisa Dystone planned not to tell riders about the closure, arguing that nobody would notice. However, Michael Perkins noticed an obscure footnote in a WMATA Board presentation and encouraged officials to mount a larger campaign to inform riders.

Some have already criticized Metro's plan. The critical blog DeCrapify DC Metro said 8 months is far longer than needed to finish the work. Another blog and popular Twitter account, WTF WMATA, wrote that customers deserve better treatment and vowed to hold Metro accountable.

How will you adjust to the Red Line closing? Let us know in the comments.

Government


DC needs better data to fight unemployment

Mayor Gray has made employment for DC residents a top priority. But without good data, policies are little more than a stab in the dark.


Photo by wouter_kersbergen on Flickr.

It's quite surprising how little data DC collects on unemployment. What obstacles do the unemployed face in getting jobs? If the obstacle is a skills mismatch, are there training providers available that teach those skills?

Do those trainers have a track record of results? If it's lack of jobs, have past development incentives created jobs as promised for DC residents?

We don't know the answers to these questions because the District government isn't collecting or reporting the data to answer them. When the data exists in some database, it's often not organized or delivered to policymakers. At other times, the data doesn't exist at all, but agencies could collect it cheaply.

Who are the unemployed?

Tackling crisis-level unemployment is one of Mayor Gray's top priorities. Yet the DC government appears to have no profile of the unemployed in DC and their barriers to employment.

Even the number of unemployed by ward that DC provides each month is deeply flawed. Each month, the federal Bureau of Labor Statistics samples DC residents and reports unemployment for DC. The DC Office of Labor Market Research then allocates that number to each ward based on out-of-date ratios from the last census. Ben Orr of Brookings has shown that the resulting numbers of jobless by ward are sometimes wildly inaccurate.

The government also has no data on the reasons why the jobless don't have a job. This lack of data creates a vacuum that is then filled with assumptions and stereotypes about the obstacles faced by jobless residents.

Advocates for cutting off Temporary Assistance to Needy Families (TANF) benefits after 5 years, as the corresponding federal program does, say that dependency on TANF is the cause of unemployment. Those who support tax incentives for developers say that lack of jobs is to blame. Smart growth advocates point to lack of affordable transit access to most jobs. Training providers say that the problem is a mismatch between workers' skills and available jobs.

Who is right? What policies should we invest in to address unemployment? We don't know because we lack basic data about the unemployed.

Investment in a survey of unemployed DC residents by a research company on an annual basis would cost a fraction of what these policies cost, and would help ensure we are actually targeting the true causes of unemployment.

Who are the training providers and are they effective?

The District has no data on the effectiveness of training providers across the city. In fact, the director of one training provider recently told me that the Department of Employment Services (DOES) actually has no comprehensive list of training providers at all.

The training providers, known as Workforce Development Organizations, provide a range of services from soft skills training and hard skills training to case management of jobless clients. What percentage of their clients get a job? More importantly, what percentage of their clients are still employed a year or two later? No one knows.

The DC Department of Employment Services (DOES) should require such reporting by recipients of government funding. This data could presumably be verified using payroll tax data.

Of course, no one knows the extent to which we should even invest in job training because we have no definitive profile of the obstacles to employment faced by jobless residents.

What development projects have received incentives, and have they been worth it?

The CFO's office does not track economic impact of development projects that receive incentives. In fact, there appears to be no comprehensive list in existence of companies that have received tax incentives for development projects over the past 5-10 years.

The District has provided billions of dollars in tax abatements and TIF financing to developers over the past decade. The rationale of proponents is that these investments bring a return to the District in the form of corporate property taxes, sales taxes and jobs for DC residents. If proponents of what some call corporate welfare are so sure that these returns are real, then why not track and report them to bolster their case?

All this data should exist in the Office of Tax and Revenue's (OTR) integrated tax system. OTR says that sales taxes cannot be tracked by address when retailers have multiple DC locations. However, recipients of incentives could simply be required to report such data by address as a condition of receiving incentives.

Hotels under construction currently in the District are receiving over $500 million of tax incentives in total. While some are questioning whether we will really see that money in higher tax revenues, the reality is we will never know.

It's difficult to solve problems when you don't know their causes or whether previous attempted solutions worked. When such information is lacking, then dogma and stereotyping supplants reasonable, data-driven policy discussions.

Poverty


Tax cuts and tech jobs won't solve DC unemployment

Technology investor Mark Ein thinks high taxes and costly office space are the only things keeping DC from being a high-tech hub, thus keeping more of its residents employed. If only it were that simple.


Photo by ismh_ on Flickr.

If the major tech companies that started in the District hadn't left, the city's crippling unemployment problem would be addressed, Ein posited before the DC Chamber of Commerce's 2011 Business Summit last week, the Current reported (huge PDF, page 9).

Ein says simply adding 10,000 more jobs will solve DC's unemployment problem. That isn't so many compared to the number that left the city in recent decades. And he recommends cutting corporate taxes to bring those jobs to DC.

But taxes aren't the reason DC isn't a technology hub, and tech jobs won't address DC's employment crisis. Putting DC residents back to work requires addressing the gross mismatch between the skills of the District's unemployed and those required by the area's knowledge economy.

Why have companies like MCI, Nextel, Corporate Executive Board, and the Friedman, Billings, Ramsey Group left the District? According to Ein, the culprits are corporate tax rates and the high cost of real estate.

By that logic, Omaha and Tulsa should be the nation's high-tech hotspots.

I co-founded a tech company in the District in 2000 that now has 60 employees and is headquartered in Tysons Corner. We moved there despite very high rents for two reasons. First, my partners who live in northern Virginia would have far longer commutes into the District than I would have to Tysons. Second, Tysons Corner is where the potential software partners and vendors areit's where the action is.

Slashing the corporate tax rates in the District would benefit owners of DC businesses like Ein. It would do little to attract outside businesses and even less to help the unemployed, who are already threatened by cuts in social services by the cash-strapped city government.

Technology hubs form where there is a large source of very talented developers, capital and a large number of similar technology companies that serve as rivals or partners. According to Michael Porter, who wrote the definitive text on industry hubs or clusters, these are factors that contribute to clusters in any industry.

Tax rates, according to Porter, are not relevant to the rise of tech hubs. If they were, the largest enterprise software firm on the planet (SAP) probably wouldn't be in Germany, and the largest tech hub in the world (Silicon Valley) wouldn't be in the state that has the second-highest business tax rates in the US.

Ein claims that Washington has "been a place for people to start companies that want to tap into the deep population of one of the most well-educated, computer-savvy young workforces anywhere in the nation". But Northern Virginia's tech cluster didn't just happen; firms located there to take advantage of federal government contracts.

Non-government software firms have been only a knock-on effect, or consequence, of the government contracting hub. My company, which sells software to phone companies, is such a knock-on effect, benefiting as we do from the local telecom sector hub that arose when telecom was heavily regulated by the government.

Washington is quite unlike Silicon Valley, Austin, or New York City with their legions of talented software developers. There is no leading computer science department in a Washington-area university, and there is no rivalry amongst local firms for the best developers as exists between Google, Facebook, and Twitter.

The number of tech companies founded in DC, to which Ein points as evidence of our lost potential, is actually not high for a city our size. One of the largest software companies in the world, Compuware, is based in Detroit, and no one is looking to the Motor City as the next Silicon Valley.

DC's unemployed also aren't jobless due to a lack of jobs. They simply lack the skills that even the bulk of existing jobs demand. More than 40% of jobs in DC require a college degree, while nationally only 20-22% of jobs require a college degree. Yet 36% of DC residents are functionally illiterate.

DC lacks a manufacturing base and is a hub for public policy, non-profit and legal sectors that require college or advanced degrees. We need to solve the root problem and not waste our time attracting more employers that require higher education.

Mayor Gray thinks job training will close this skills mismatch. That sounds great, but one wonders what cluster will form in the District that can provide 10,000 jobs for which functionally illiterate residents can train in a year or less. Gray hasn't delved into such details, but it's these details that must be worked out if job training in the District is to avoid being a multimillion dollar boondoggle.

Is there an industry that could employ the 30% of Ward 8 that is unemployed, yet find a home in a knowledge-based economy? The answer is key to the city's ability to wash the moral stain of 30% of its children living in poverty.

Government


Can job training work?

One of Mayor-elect Gray's top priorities is improving job training to reduce unemployment that has reached crisis levels in Wards 7 and 8. Gray will hold a Jobs Summit on Dec 13 to gather ideas on training.


Photo by Michael @ NW Lens on Flickr.

Momentum appears to be building for greater investments in training. Councilmember Marion Barry's proposal to cut off TANF benefits after 5 years presumes such a boost in training.

And massive job training is often viewed as the only possible hedge against displacement of long-term working-class residents as gentrification continues across the city.

But does training work? Or could training simply end up costing DC far more than the money it would save by cutting 17,000 families off of welfare?

There is a real debate about the effectiveness of public investment in job training. The debate generally proceeds as follows.

Training Doesn't Work: The millions that have been spent on training in the American Recovery and Reinvestment Act, as was shown by the Labor Department and the NY Times, have demonstrated zero results. It makes us feel better, but the data shows that recipients of publicly subsidized training end up pretty much like they did before the training.

Training Works: This criticism is true in general. Many, perhaps most, training programs have been poorly executed. But studies, such as a recent study from Public/Private Ventures, have shown that training programs that target high-demand jobs in a city's growth sectors do work.

Training Doesn't Work: Not if the jobs simply aren't there. Training doesn't create jobs.

Training Works: No, but training does close the mismatch between the skills required by high-demand jobs and the skills of the unemployed. And employers in high-growth fields report that they are having trouble filling lots of positions due to precisely this mismatch.

Furthermore, if we can create a workforce whose skills do match the needs of high-growth fields, employers will be attracted to DC and will create more jobs. So, training can create jobs in the long term if it targets high-demand jobs that employers have difficultly filling.

Training Doesn't Work: This sounds great. But the mismatch between the skills of most unemployed and the needs of the labor market, particularly in DC, is sadly too great for training to bridge.

More than 40% of jobs in DC require a college degree, while nationally only 20-22% of jobs require a college degree. Yet 36% of DC residents are functionally illiterate.

Approximately 18,000 TANF recipients have less than a high school credential and almost 50% are reading below 7th grade. What training does Councilmember Barry expect will match these 18,000 TANF recipients with the jobs that exist in DC?

What do you think? Can job training work? Is the skills mismatch sadly too great to bridge? What implications do these considerations have for Gray's job training plans?

Gray's Jobs Summit, which will be chaired by Barbara Lang, president of the D.C. Chamber of Commerce, and Josyln Williams, head of the Metropolitan Council of the AFL-CIO, should address these difficult questions head on.