Displaced workers all trained up and still jobless

08/23/2014 8:00 PM

08/21/2014 11:24 PM

When the financial crisis crippled the construction industry seven years ago, Joe DeGrella’s contracting company failed, leaving him looking for what he hoped would be the last job he would ever need.

He took each step in line with the advice of the federal government:

• He met with an unemployment counselor who provided him with a list of job titles the Labor Department determined to be in high demand.
• He picked from among colleges that offered government-certified job-training courses.
• And he received a federal retraining grant.

In 2009, DeGrella began a course at Daymar College – a for-profit vocational institute in Louisville – to become a cardiology technician. Daymar officials told him he would have a well-paying job within weeks of graduation.

But after about two years of studying cardiovascular physiology and the mechanics of electrocardiograms, DeGrella, now 57, found himself jobless and $20,000 in debt. He moved into his sister’s basement and now works at an AutoZone.

Millions of unemployed Americans like DeGrella have trained for new careers as part of the Workforce Investment Act, a $3.1 billion federal program that, in an unusual act of bipartisanship, was reauthorized by Congress last month with little public discussion about its effectiveness. Like DeGrella, many have not found the promised new career.

Instead, an extensive analysis of the program by The New York Times shows, many graduates wind up significantly worse off than when they started – mired in unemployment and debt from training for positions that do not exist, and they end up working elsewhere for minimum wage.

Split between federal and state governments – federal officials dispense the money, and states license the training – the initiative lacks rigorous oversight by either. It includes institutions that require thousands of hours of instruction and charge more than the most elite private colleges. Some courses are offered at for-profit colleges that have committed fraud in their search for federal funding. This includes Corinthian Colleges, which reached an agreement last month with the federal Education Department to shut down or sell many of its campuses.

The Times examination, based on state and federal documents, school and court records, and interviews, shows that some of the retraining institutions advertise graduation and job-placement rates that often do not hold up to scrutiny.

Little guidance

The idea of dividing responsibility between federal and state officials was to give local and state authorities more power in helping unemployed people in their areas. But those who sign up for training are often left to navigate a bureaucratic maze with almost no guidance. To avoid any appearance of favoritism, federal job counselors are not allowed to recommend schools to job seekers, leaving many of them to unwittingly select institutions that are expensive, have a history of legal trouble or are academically substandard.

When the newly unemployed seek government benefits, their skills and education are assessed at a federal employment office. If there are too few jobs in their current field, they are selected for retraining through the Workforce Investment Act. They choose from among dozens of professions, with each successful applicant receiving a stipend of up to $3,000 a year to pay for the training. The rest typically comes from federal grants and loans.

A divorced father of two, DeGrella said he was among many in the course at Daymar who were unable to find jobs and who now owe thousands of dollars. One classmate is $25,000 in debt and works at a McDonald’s. Daymar, which declined to comment, is being sued by Kentucky’s attorney general for misleading students.

“I’ve worked hard my whole life,” said DeGrella, who also once managed a manufacturing company. “I’m just angry that I was trying to improve myself and my situation, and end up $20,000 in debt.”

While government officials defend the retraining program as useful – and clearly it does lead some unemployed people to new careers – neither federal nor state agencies collect data on the number of people who finish job training or earn professional certificates. As a result, officials acknowledge that they are unable to determine how many students the program has helped find appropriate jobs during the past 15 years.

The law was enacted in 1998 and expanded in 2009 as part of the federal economic stimulus package. As the economy has improved – which has led more of the long-term unemployed to try to re-enter the labor market – training and apprenticeships have become a central component of the Obama administration’s plan to match the unemployed with job openings. About 21 million jobless people entered retraining in 2012.

The training program offers courses at community colleges, vocational and business schools, and four-year universities where students can study everything from petroleum pump systems to makeup for the cinema.

Tracking performance

When Congress reauthorized the Workforce Investment Act last month, it did not address concerns about the cost of some of the schools, the level of debt students were accruing or whether counselors should be allowed to offer more direct professional advice. In a nod to past criticism, however, the updated law does require states to better track former students to determine whether training helped them find work with sustainable wages.

During interviews, Labor Department officials said the program works well. They said that assessing the quality of training is up to the states, and that the agency does not regulate tuition and is unaware of concerns related to prices.

“If providers fail to meet the state’s requirements and job-placement policies, states have a process in place to revoke their eligibility,” Eric Seleznow, a deputy assistant secretary in the Labor Department, said in response to written questions.

While the Labor Department said 4 out of 5 dislocated workers had found jobs after undergoing training, a spokesman acknowledged the figure does not distinguish between people who completed job training and those who quit.

One for-profit school, Corinthian Colleges, based in California, is being sued by the attorneys general of California and Massachusetts, accused of violating securities and consumer protection laws and pressuring students into high-interest subprime loans. Corinthian agreed in July to have a federal monitor oversee its operations as it sells many of its campuses.

Kent Jenkins, a Corinthian spokesman, said its typical student is from a low-income family and has failed in previous attempts to earn a certificate or degree.

“We offer training in health care programs, where if you complete the training, the first job pays in the low- to mid-$20,000s a year,” he said. “That’s not a fortune. But it gets you out of unemployment, and gets you on a track for a career. It’s a good investment.”

A medical assistant course offered by Corinthian that costs $19,000 represents what Jenkins said was a “consequential amount, but not the proverbial mountains of debt.”

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