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Economy

Workforce Program Helps People Find Jobs, Not Careers


 workforce1

"Thank you for calling Workforce1," begins the recorded greeting. "Your success begins here."

If you called, you live in New York City and are one of an estimated 600,000 city residents who need a job.

Many lack an advanced education, a professional network and financial resources. With these handicaps, they must find work in the most competitive job market in decades, in one of America’s most competitive cities. And so thousands of them -- 387,661 people in 2010 -- will try and find employment through work-related education, job training and employment services -- assistance known as workforce development. For them, the workforce development system is a lifeline to the job market and employment.

For many workers, the lifeline falls short. It simply cannot overcome the shortage of employment, or provide work paying a decent wage. Workforce development may offer a path to employment – but not to the middle class.

A Network of Programs

Workforce1, as well as any single organization can, represents workforce development in New York. But it is only a small part of the city's diverse workforce development system, which technically is not really a system. It's more a collection of independent programs that operate, in a thousand different ways, with the shared intention of helping businesses fill their labor needs and New Yorkers get jobs. It is a collection of nonprofits, public and private colleges, local businesses, unions, and a number of city, state, and federal organizations that provide, fund, and oversee work related programs.

The Department of Small Business Services (which contracts Workforce1), the Human Resources Administration and the Department of Youth and Community Development contract out the majority of public services to providers. These providers -- and there are thousands of them -- operate in every borough as a bridge between workers without work and businesses with jobs.

Workforce1 has offices in all five boroughs, each managed by a nonprofit, for-profit or educational institution that won a competitive contract. These centers prepare and connect New Yorkers with job opportunities, but the priority is jobs placement, the connect part.

The first stop for job seekers is a two-hour introductory session delivered by a career advisor like Gwendolyn Gladden. It's like a class for the jobless. Standing in front of 30 jobseekers wearing a neatly ironed power suit, Gladden lectures with a mix of hope and realism. "Don’t come with that old tired energy," she said. "Come with that enthusiasm. Today is the day I find employment."

She reminds the class it takes three months to find a job –- and only if they treat finding a job like a job. Yes, she said, $80,000 salaries exist, but not everyone can get one. And some of the students may have to change professions. After all, Gladden did.

After 20 years in the health care industry she lost her job. So she came to Workforce1 four years ago. Now a career advisor, she helps those who sit where she once sat.

A majority of the jobseekers receive general assistance on how to navigate the job market and ace an interview. They get help on resume building, interview prep, career assessment, counseling and access to job listings.

Those who qualify may receive more substantial and specific training at one of Workforce1’s three sector-oriented centers.

The city’s total workforce development expenditure is $1.36 billion, with $615 million coming from city revenues and the rest from a variety of sources including Congress under the Workforce Investment Act. Federal funding for Workorce1 has decreased from about $62 million in 2006 to just over $36 million this fiscal year.

Because of budget cuts, the Individual Training Grant voucher program, which provided funding for some specific skills training, has been temporarily suspended. This has affected the Transportation and Industrial Center in Queens, which provided Computer Numerical Control machinist training. The Long Island City Health Center'sparamedic and emergency medical technician programs also have been suspended due to the funding problem.

The Job Gap

Workforce development began seriously with the 1960s War on Poverty. The system trained entry-level workers and "more or less threw them over the wall and hoped they landed in a job," said Paul Osterman of MIT's Sloan School of Management. Now the city, like Workforce1, follows a demand driven strategy: work with businesses, learn what jobs are or will be available, and train people for those jobs.

The problem, though, is the available jobs. Some economists like to compare the American economy to the letter U -- some high-income jobs on the top, a lot of low-income jobs on the bottom, and a hole where middle-income jobs used to be. One System for One City, the city’s state of the workforce development system report, found, "As a tentative recovery began in 2010, employment growth occurred both in high paying sectors like finance and insurance and professional services, and typically low paying sectors like health care, retail, and accommodation and food services."

The recession has obviously led to a jobs deficit. But even if thousands of new jobs are created, middle-paying manufacturing jobs are unlikely to return from the grave. The job market will likely continue to be “U” shaped, which means lots of low-wage jobs that help New Yorkers survive on the ragged edge of the economy with little chance of escape. There is a good jobs deficit.

Of course, many decent middle-paying jobs exist. But less educated workers, typically those in the workforce development system, are unlikely to get them. Where are all the Good Jobs Going? a recent book on job quality in America, stated, "Good jobs are not disappearing for everyone, but they are largely disappearing for less-educated workers." Only 9 percent of the people who used the city's public workforce system in 2010 had a college degree.

A Job, Not a Career

Businesses benefit from the workforce development system, says Matt White, assistant commissioner of policy and planning from Small Business Services, because it connects them to qualified job candidates in a quick and cost-effective way.

Some job seekers benefit by finding work. But the quality of that work concerns some experts.

The average job placement from the workforce development system pays $10 to $11 an hour, according to James Parrott, deputy director and chief economist of the Fiscal Policy Institute. That might be tolerable if placements led to promising careers. But Parrott says upward mobility is not likely. "My sense is that the majority of job placements don't have significant advancement opportunities," he said.

With so many people needing jobs, the focus has to be on placement as opposed to getting people on a career ladder, Ester Fuchs, a professor at Columbia University who helped create the city's workforce development strategy, said. The program, she added, had to concentrate on "short term training as opposed to the long-term career training."

"Demand is so high now," Fuchs said. "The general view is that we have to serve the large numbers of people who are looking for employment. And we have to work with the business who are offering jobs."

The situation, by some measures, has improved. Workforce1’s median wage of job placements increased from $9 an hour in 2009 to $10 in 2010, and 75 percent of those jobs were full-time. "We developed an expertise there," said Andrew Campbell, Brooklyn’s Workforce1 Deputy Director. Now there is a mission to place workers in jobs that pay an hourly wage of $15 or more.

The Money Crunch

Any gains, though, could be threatened by budget cuts. Parrott, White and Osterman agree that without more funding the workforce system is unlikely to help workers advance into middle paying jobs. Lack of money "hurts advancement opportunities for customers," said White. Osterman put the need for funding bluntly: "Peoples' lives and careers are at stake, and these programs are important."

Bloomberg wants to expand Workforce1, despite funding cuts, and hopes to achieve 40,000 new job placements in 2012. The city reported 24,701 Workforce1 job placements last fiscal year, up from 17,218 in 2007. Recently, however, those numbers were called into question.

Seedco, a nonprofit, runs both the Upper Manhattan and Bronx Workforce1 centers. "In at least 400 cases in three months, [staff members at a job center] had taken the history of jobless clients, changed dates and salaries, and claimed past employment as a job found, " Michael Powell of the Times wrote. In response, the city invalidated 44 percent of this year's Seedco job placements. The investigation is ongoing.

Fake jobs aside the question remains whether the proposed 30,000 or 40,000 jobs will be good jobs? Or will they be for part-time cashiers making little more than minimum wage at a new tourism center that thrives because the dollar is weak?

The lack of skills among many job seekers and the shortage of good jobs create a grim picture. But as Sydney Fuller-Jones of Boston, who has a job and still qualified for welfare services once said, "Any is plenty in the land of none."

Council Acts to Rein in Contracts


Little Pakistan
Photo by Kirk Kitell
Science Applications International Corp., or SAIC, the main contractor on the CityTime project, has some 41,000 employees at locations around the world, including this one in Texas. An executive with the company has been charged with taking more than $5 million in kickbacks on the project.

(This article was updated on Thursday afternoon to reflect the mayor's comments.)

The idea that private companies can do much of what government does and do it better and cheaper has taken a battering in New York City over the past few years.

News accounts and prosecutors have detailed mind-boggling cost overruns on the CityTime project. A shadowy company whose owner was having an affair with a top Department of Education official allegedly bilked the department out of millions of dollars. And so on.

Yesterday the City Council stepped into the fray. By a unanimous vote the it passed a bill sponsored by Councilmember Darlene Mealy that would subject city contracts to a kind of cost benefit analysis and require agencies to publicly disclose what services they plan to contract out in the coming year.

The Contract Boom

Last year, according to the council, the city spent more than $10 billion on private contractors. This amount will go up by about 6 percent this year –- far more than the city budget overall. As Gotham Gazette reported this spring, the contract budget has grown by more than 70 percent during the Bloomberg administration. While social service contracts – many with nonprofits – account for the largest chunk of city contracts, the biggest increase has come in professional service contracts, which mushroomed from $357 million in fiscal year 2003 to nearly $1.5 billion projected for this year.

Against this backdrop -- to say nothing of cost overruns and corruption -- that contract budget became a point of contention during last spring's contract talks. City Councilmember Robert Jackson for one repeatedly questioned why the administration was increasing contracts at the same time it was threatening to lay off teachers.

Municipal employee unions, notably DC 37, the city's largest municipal employee union, have balked at taking tasks away from their members and giving them to private often non-union companies.

The administration has said it needs specialized outside expertise, and some officials – notably former Deputy Mayor Stephen Goldsmith -– have argued that private contractors can deliver service more cheaply than city workers.

The Costs of Privatization

The council bill -- Intro 624 -- takes direct aim at that contention.

Before a city agency could extend, renew or enter into a contract worth more than $200,000 it would have to analyze whether the contract results from displacement of city workers or would displace city workers. If the study determines some city workers would lose their jobs, the agency must then look at the benefits and costs of contracting out the work and submit that analysis to the city comptroller, who reviews city contracts.

In addition, after receiving bids, the agency would have to analyze the costs and benefits of the contract and tell the council, the comptroller and union officials why the contract makes sense for the city. The council can hold a hearing on the contract in question.

More generally, every year the administration must submit a contracting plan for every city agency. Along with boosting transparency, this provision is seen a possible aid to small and minority contractors who would have more advance warning of upcoming city contracts, giving them time to prepare possible bids.

Announcing the measure, Quinn portrayed it as a money-saving move. While privatizing government work has been seen as a cost-cutting measure, Quinn said in many cases, sending public work to private companies actually increases costs. The bill, he said, "will make sure that we are checking on whether we are saving New Yorkers money every time we consider contracting out."

Council, though, has gone down this path before. In 1990, it passed Local Law 35 requiring similar analyses of contacts. But, as Quinn put it, "the implementation of that law has not lived up to its promise." She noted that in the more than 20 years since, only two costs analyses have been conducted -- two during the Giuliani administration and zero under Bloomberg.

The new version -- 624 -- hopes to close loopholes that enabled the last two mayors to dodge the requirement.

Waste, Fraud and Abuse

To many New Yorkers the biggest concern about city contracts has been high costs and low performance.

Only last week, the city's special commissioner of investigation for the Department of Education found that Future Technology Associates, a firm the city hired to do computer work on school purchasing, payroll and finance systems, had overcharged the city by at least $6.5 million.

Earlier in September, the New York Times reported that the cost of a contract for a computerized personnel system for the city had increased by more than five fold with the work far from complete.

And then, of course, there is CityTime, the $63 million project whose costs rose to more than $720 million, amid what prosecutors charged was corruption and fraud. Already five people have been indicted in connection with that one.

Asked whether the council bill would help avoid such abuses, Quinn expressed some doubt.

"I hardly imagine that in an analysis you would have a column of estimated criminality involved," she said.

But, she added, the increased disclosure and transparency could help warn city officials of cost overruns and other contract problems.

"This piece of legislation is only the beginning," she said. "Oversight is a very important piece, one that is for a different piece of legislation."

On to the Mayor

During the disputes over contracts, Mayor Michael Bloomberg has shown no sign of retreating from his reliance on them. And over the past months he has defended some of the most problematic ones. At one point he said the city did a pretty good job" on CityTime. And in response to questions from the Times about the problems with the personnel system known as Nycaps, a mayoral spokesperson said both it and CityTime are now "fully functioning systems used daily by thousands of city employees."

Bloomberg says Wednesday that he opposes the a law passed by the City Council . WNYC's Bob Hennelly reports the mayor says the bill will cripple the city's ability to be more efficient.

"To put impediments to us getting the best deal for the taxpayers particularly during this economy is something we can not tolerate. We are just not going to have this bill," Bloomberg said. "This also is probably unconstitutional."

With the council voting unanimously for the bill, it seems it could easily override any mayoral veto -- the kind of showdown that Quinn has rarely allowed to happen during her tenure. If -- as he implies -- Bloomberg takes the issue to court, it could set the stage for the dispute between the mayor and the council over contracts to drag on for years.

As Deficits Loom, City Faces More Cuts


bloomberg
Photo by Edward Reed
In May, Mayor Michael Bloomberg announced a budget that relied almost exclusively on cuts to erase a budget gap. With more red ink on the horizon, will he do the same this year?

If it's September, it must be time for Mayor Michael Bloomberg and his budget office to start cutting spending by city agencies. The current, fiscal 2012 budget that was adopted less than three months ago projects a $4.6 billion deficit for the next fiscal year. A year ago, facing a much smaller projected deficit for the next year -- $3.7 billion -- the mayor began a series of cutbacks that eventually reduced spending by $1.1 billion.

If there was any doubt about fiscal prospects, recent reports from the state Financial Control Board, the state comptroller and the city comptroller dispel them. These grim reports from fiscal monitors and recent studies from the Independent Budget Office, however, also suggest some new ways the mayor could fill budget gaps.

The key reality facing the mayor is that, unlike in recent years, there is no sign that the city will have a substantial budget surplus at the end of this year. Without something like last year’s $3.7 billion surplus, and with deficits averaging $4.8 billion over the next three years, the city's fiscal future looks "problematic" to the Financial Control Board and "challenging" to the state comptroller. Put a bit more dramatically, the board says, "The city's ability to avoid contentious expenditure reductions will be tested."

Expenditures and Other Fiscal Uncertainties

Over the last three years, the mayor has shown a certain political genius in avoiding "contentious" responses to his 10 packages of budget reductions. To accomplish this, he has very effectively used his extraordinary discretionary powers to make modifying the city budget a year-round -- rather than once-a-year -- process, with little opposition from the City Council.

The impact of 10 consecutive reductions is equally extraordinary. The State Financial Control Board totaled the effects: The $1.1 billion cut in 2011 was preceded by cuts of $1 billion introduced in fiscal year 2008, $2.1 billion in 2009, and $1.1 billion in 2010. Add them together and that means that the current $66 billion city budget is $5.3 billion smaller than it would otherwise be.

The fiscal monitors are not in the business of telling the city how to balance its budget, but they do a good job of explaining how the mayor balances the budget and at noting the fiscal uncertainties the city faces. The uncertainties include questions about projected out-year budget deficits, collective bargaining, pension costs, workforce cuts and the use of reserve funds.

The New Reality

In explaining why the city faces an ominous budget outlook, the state comptroller analyzes what actual revenues come in during a fiscal year and what actual spending occurs during that year. For instance, in spite of the cuts of more than $3 billion introduced in 2008 and 2009, "spending exceeded current-year resources by about $2.4 billion in FY 2009 and $2.1 billion in FY 2010." Those budgets were balanced only by using surpluses accumulated from previous years.

In FY 2011 the report estimates that, because of unanticipated revenues from an improving economy, current-year spending exceeded current-year revenues by only $303 million. The report goes on to say, "For FY 2012, however, we project a current-year deficit of $4.4 billion, reflecting the city's heavy reliance on nonrecurring resources accumulated in prior years to balance the budget."

The Financial Control Board suggests what the mayor should do next: "The task for the city will be to manage the FY 2012 budget in a way to start to build a surplus to the level achieved in FY 2011." In other words, the mayor should continue the same early-year and mid-year budget cutting he has made into a near science.

The Unknowns of Collective Bargaining

But there are many other uncertainties this year, including contract negotiations with city workers. The mayor's current three-year wage freeze, for instance, has freed up labor reserve funds for balancing the current budget.

The question is how long the mayor can keep the freeze on. According to the state comptroller's report, more than 90 percent of the city workforce is working without a collective bargaining contract. And the adopted budget includes funding for only a 1.25 percent annual wage increase for three years following the expiration of the three-year wage freeze.

Since the three-year freeze and proposed minimal raises for the following three years are still being negotiated, the state comptroller points out, "If instead wages were to rise at the projected inflation rate during the six-year period without any offsetting savings, costs would increase by $1.5 billion in FY 2012, $1.6 billion in FY 2013 and reach $2.7 billion in FY 2015."

The teacher's negotiations present more uncertainty. The state comptroller notes that the city "has yet to conclude an agreement with the United Federation of Teachers for the previous round of bargaining." That means that in FY 2009 and 2010, while other civilian employees received 4 percent annual increases, the teachers had no increase. Instead, the labor reserve funds for teachers again went to budget balancing.

Negotiations between the teachers union and the city, with the help of a mediator, continue, but a settlement apparently is not imminent. The state comptroller concludes, "A retroactive agreement similar to those negotiated by the city's other unions for those years would increase costs by $1.7 billion in FY 2012 and by $900 million annually thereafter."

Pension Costs

Another uncertainty is the projected cost of city pensions. Costs have increased dramatically beginning in fiscal 2003 after the "state enhanced benefits, and pension fund investments fell short of expectations," according to the state comptroller. The city currently estimates pension costs, which averaged about $1.4 billion a year in the 1990s, will be $8.4 billion in fiscal 2012, increasing to $8.7 billion in 2015.

In anticipation, the city in its four-year financial plan set aside $1 billion a year in a reserve fund. But it's not clear it will need that fund this year.. Nor, on the other hand, is it clear $1 billion will be enough.

The Retiree Health Benefits Trust

To balance budgets recently, Bloomberg has tapped into the Retiree Health Benefits Trust Fund -- to the tune of $672 million in the current budget. The fund was set up by the mayor several years ago to set aside money for the city to cover its accrued liability for future post-employment retiree benefits, including health benefits. That liability, according to the state comptroller, reached $75 billion as of fiscal 2010. (The city has been paying these benefits on a pay-as-you-go basis.)

The state comptroller and Financial Control Board, object to what the mayor is doing. "The city, to its credit, deposited $2.5 billion in the Retiree Health Benefits Trust during the last economic expansion to fund these costs," the state comptroller says, "but it has begun to draw down these resources to help pay current operating expenses. … The state comptroller believes the city should avoid using these resources to help balance the budget."

The Financial Control Board agrees: "It is unfortunate that the city has continued to reduce the trust over the last two fiscal years to cover investment losses incurred in prior years while [post-employment benefit] liability continues to grow at a constant high rate."

Yet this fund, which now holds about $2 billion, remains a tempting resource for an administration reluctant to find new and recurring tax revenues and that regularly uses ad hoc, non-recurring revenues for budget balancing.

Workforce Cuts and Consequences

Cutting the size of the city workforce has also helped balance the budget. The fiscal 2012 executive budget in May reduced staffing by more than 9,000 positions. However, the City Council reversed some of those cuts. The state comptroller estimates that the final budget eliminates 5,475 slots in fiscal 2012, including 2,655 positions in the Department of Education.

Originally, the mayor wanted to eliminate 6,166 schools jobs, including 4,166 teachers. But the negotiated restoration of 4,666 education jobs should not mask the loss for the school system. Many of the restored positions, for instance, are funded for only one year.

The state comptroller notes that in fiscal 2012 the schools will have 7,000 fewer teachers than in fiscal 2009, and another 1,200 fewer in fiscal 2013. The effect? "Class sizes are expected to continue to rise, and other services, such as after-school programs, may be reduced," his report says.

Contracting

The fiscal monitors also touch on some management areas where potential savings could help budget balancing. One is the rapidly growing contracting budget, which emerged as a point of contention during last spring's budget talks. The state comptroller notes the "heightened scrutiny because of the increasing amounts spent on [contracted] services, and instances of waste and fraud." This, of course, is undoubtedly a reference to the scandal surrounding the City Time contract, which continues to unfold.

Spending on contractual services rose by nearly 75 percent between fiscal 2001 and fiscal 2010. It then totaled $10.6 billion, or 16.3 percent of the 2010 budget. According to the state comptroller, the 2012 budget is slightly less -- $10.5 billion for contractual services -- although that could grow as the city receives federal and state grants later in the year.

The three largest areas are education-related: payments to private special education and charter schools ($2.2 billion), student transportation ($1.1 billion), and direct professional education services ($845 million). The Independent Budget Office has noted that, as school budgets have been cut, school contracting has increased.

Overtime

The city could also save some money by reducing overtime costs, now over $1 billion a year. Uniformed agency overtime alone, including civilian personnel, reached $963 million in fiscal 2011, according to the Financial Control Board. That's $240 million more than the city projected at the beginning of the fiscal year.

The board says the current four-year financial plan "grossly underestimated" future overtime costs. The city comptroller estimates the city's overtime projection for fiscal 2012 is $210 million less than it will ultimately be. If he is correct, the city would have to fund the extra costs during the fiscal year, adding yet another uncertainty to mid-year budget balancing.

Tax Revenue Options

As the mayor begins his mid-year -- or earlier -- modifications in the current budget to meet next year’s $4.6 billion deficit, there is no indication he is willing to address tax revenues. But as the reality of yet another $1 billion to $2 billion mid-year cut in agency services unfolds, it might be time to do just that.

The Independent Budget Office's Budget Options is an excellent source of practical expenditure-saving and tax-revenue programs. One of the more familiar ones is a restoration of higher personal income rates for joint tax filers with incomes above $200,000. New top rates of 4.013 percent and 4.264 percent (affecting only 7.8 percent of city resident tax filers) would still be much lower than the top rates in effect from calendar 2003 through 2005 and most of the 1990s, yet produce an additional $450 million in fiscal 2012.

In a recent web blog the budget office noted that the city's biggest tax, the property tax, will bring in $17.6 billion in fiscal 2012, about 42 percent of city tax revenue. But it would generate $13.5 billion more were it not for "the slew of [property] tax exemptions."

Most of these exemptions, of course, go to government property and religious property, and so are untouchable.

Some exemptions, however, could be challenged. Perhaps the most outrageous case is Madison Square Garden, which has not paid any property tax for decades, costing the city $15.1 million in lost revenue in this year alone. The Independent Budget Office points out that a case can also be made that some private institutions -- health facilities, foundations, charitable organizations, and private schools, colleges and universities -- could negotiate voluntary payments (called payments in lieu of property taxes, or PILOTs). Many do that in other cities.

In other words, the mayor need not simply announce yet another autumn round of agency downsizing and lost services. He has a chance to address alternative strategies that could minimize such cuts: Management reforms and a willingness to find new, equitable tax revenues would be good places to start.



 Glenn Pasanen, who has taught political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001.



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