Strategy Three: Subsidy Accountability

Unfortunately, in some communities Workforce Investment Boards (WIBs) are using public funds to subsidize low-wage jobs. In addition to using high road community audits to focus attention on higher wage jobs and realistic self-sufficiency measures to set job quality standards for the workforce system, there are other techniques that can be utilized by workforce boards to ensure the return on their investment. These techniques can be used to block the low road, limiting the use of scarce tax dollars to subsidize jobs that undermine the community.

The Workforce Investment Act (WIA) envisioned that WIBs would play a broader role in determining labor market policies in their communities. That role included participating in economic development decisions designed to attract and maintain jobs in their communities. One way to meet this vision is for WIBs to review the terms of economic development subsidies that are being offered in their communities for their impact on job creation and retention. Boards can advocate that all the terms of these subsidies be made public and that certain techniques be adopted, such as “clawbacks” which require repayment of subsidies if employers do not live up to the levels of job creation they promised to get the subsidy.

This is an opportunity for members of the WIB to be advocates for responsible use of public dollars. The quality of jobs created with public funds – whether those funds are economic development funds or workforce development funds – should be a matter of concern to the workforce board.

The question "Should we provide public dollars to promote enterprises that will hire workers for minimum wage jobs with no benefits?" is one that is appropriately posed by labor representatives and other advocates of high-road development on workforce boards. And when those public investments include the WIB’s own resources to recruit or train employees for those enterprises, the voice of the workforce board can be even more critical in setting the requirements the community wants to place on the investment of public resources.

While virtually unknown ten years ago, subsidy disclosure laws and clawbacks in economic development contracts have become a regular part of the practice in public economic development. But it is also important to practice what you preach. Boards can use these same techniques in their own investments. WIBs are able to require a legally binding instrument in contracts with employers for on-the-job training (OJT) or customized training to commit the employer to both the number and quality of jobs to be created. And while this practice would be new to the field of workforce development, the board could also set guidelines to recapture or clawback funds if those commitments are not met.

To introduce labor representatives to these techniques, speakers from Good Jobs First (GJF) have participated in Institute-sponsored training sessions, presenting information on subsidy accountability tools. As a follow-up to the 2002 regional conferences, GJF developed a model contract that labor representatives could ask their WIBs to use in applying job quality standards and clawbacks to their agreements with employers. The Institute and GJF are both ready to assist labor representatives with this effort. You may also want to visit the Good Jobs First website at www.goodjobsfirst.org/gjf.htm.

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