Economic Development

Training for Free

A Georgia program that President Obama wants to expand nationwide shows that businesses might hire more workers if they don’t have to pay for training.
by | December 2011

The time and money it takes to find, hire and train a new employee who may not last beyond the training period makes many private-sector businesses hesitant to even start the process -- especially during tough economic times. But what if employers didn’t have to pay to train prospective employees? That’s the premise of a program in the Peach State called Georgia Works.

It breaks down like this: People who receive unemployment checks from the state train with an employer that’s looking to hire for no more than two months. The state pays the trainee a small travel and child-care stipend, and covers his or her workers’ compensation. Jobless residents walk away with a training certificate and possibly a job, while businesses get to test out workers before making permanent payroll commitments.

The program, which started in 2003, has employed more than 4,000 people and certified more than 20,000 people in various professions. Employment representatives at each of the more than 50 career centers throughout the state try to match people with job training in fields in which they were previously employed, fields they want to break into or fields in high demand.

Clerical work accounts for the largest portion of jobs available -- 40 percent -- while retail, child-care and sales jobs are also popular.

For example, a former clerical worker who was laid off from a bank -- one of the state’s industries hit hardest by the recession -- applied for the program. A long list of employers were looking for clerical workers, but in the medical field. So Georgia Works set the participant up with training for a clerical position in a medical facility, combining her existing skills with new ones that would expand her job opportunities.

Not everyone gets hired at the end of training. In fact, only about a quarter of participants do. But the remaining three-fourths of them leave certified in a new skill that will make their resumés more attractive to future employers.

The program’s positive track record has encouraged other states and the Obama administration to replicate it. In 2010, New Hampshire started virtually the same program, called Return to Work. As part of his jobs package, President Obama has proposed a national program modeled after Georgia’s. Time will tell if his proposal becomes a reality.

Despite the program’s success, Georgia Department of Labor employees can list several problems with it. Since receiving national attention, some labor advocates have raised concerns that the program violates federal laws since participants are not paid while they are trained. But the U.S. Department of Labor laid those concerns to rest when it scrutinized the program and found that it was in compliance with all labor laws.

One of the program’s biggest problems, according to state Labor Commissioner Mark Butler, is its lack of adequate oversight. There’s no full-time program leader, the record-keeping is shoddy and the agency lacks the manpower to monitor each trainee’s experience -- to make sure employers are training participants, not using them for free labor. The department has been working to resolve all of those problems, especially since the new administration took office this past January, Butler says.

The greatest challenge for the program so far came when it expanded, in an effort to address the needs of the state’s growing jobless population.

In 2009, Georgia’s unemployment rate reached 10 percent -- its highest since the early 1980s. To try to get people back to work faster, Michael Thurmond -- the Labor Commissioner at the time and the founder of Georgia Works -- opened the program to anyone who was unemployed, regardless of whether they received government aid. Enrollment in the program exploded: In less than a year, the number of participants jumped from roughly 3,000 to 18,000.

“It ended up being somewhat disastrous because there wasn’t enough planning put in place,” says Butler, noting that the program exhausted its annual funds in less than six months that year. Within five months, Butler took the program back to its original form, allowing only unemployment recipients to participate.

Although the change made some unhappy, Butler says it was the best decision. “We actually had more complaints about how the program was run when it was expanded than when we got it back to its original state.”

Before New Hampshire started Return to Work last year, Georgia labor officials warned their New England counterparts about problems to watch out for and how to avoid them. It turned out, though, that the two states had very different experiences.

With a population one-tenth of Georgia’s and an unemployment rate half as high, New Hampshire has so far dodged the problems that plagued Georgia Works. The main reason for this is the smaller caseloads, allowing employment representatives to check up on employees and trainees more often. In addition, representatives have more time to make sure participants are placed in training opportunities that will benefit them most. As a result, 65 percent of participants have made the leap from trainee to employee in New Hampshire -- more than twice the hire rate of Georgia Works.

“The true beauty of the New Hampshire program is the individual matchmaking between trainee and employer,” says Tara Reardon, the state’s Labor Commissioner. “We sell this program to employers as reducing their costs of hiring and training to make sure they got the right person … so we are very particular about who we send out to make sure it’s a good fit for that employer.”

The other reason New Hampshire has had more success is because its program isn’t dependent on the state budget. In fact, it didn’t take any new funds to start Return to Work because the state chose not to offer a stipend, which accounts for nearly all of Georgia Works’ costs. Georgia Works gives its trainees a $240 stipend over the course of the training time. So when Georgia’s program was opened up to anyone without a job, it became fiscally unsustainable. But when New Hampshire expanded its program, there were no negative effects, Reardon says.

Although Butler doesn’t believe Georgia Works is a cure-all for unemployment, he believes that with proper planning, it’s a valuable “tool in the toolbox” that can be used to get people to learn new skills and return to work at no risk to their future bosses.

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