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Few Laid-Off Oregonians Benefit from Federal Job Retraining Efforts

All told, Oregon lost more than 54,000 jobs from late 2000 to late 2003. But Federal officials denied training benefits to software engineers whose jobs were outsourced overseas, saying the program only helps workers producing "articles."
The Oregonian, March 21, 2004

The global economy gave Gordon Miller an opportunity to see the world. Now, it's left him without a job, even after the federal government paid nearly $12,000 for his second MBA.

Miller's economic tailspin started when Hewlett-Packard Co. sent his supply-chain engineering job to Singapore in 2001. He went back to school at age 54 to get an MBA in international management and graduated last March from Portland State University.

He spent last fall lecturing college students in Russia, drawing on his past experiences opening a wafer fabrication plant in China and solving product rollout problems in Europe. He seemed ideally suited for the new economic order.

But no one has offered him a permanent job.

Miller is one of thousands of Oregonians who lost their jobs because of foreign competition and sought help from federal job retraining programs in the past three years. Despite millions of dollars spent in Oregon, most of the laid-off workers, like Miller, still are waiting for a job that matches their skills and pays as well as their old one.

An analysis by The Oregonian of the federal Trade Adjustment Assistance program, along with interviews with more than two dozen laid-off workers, shows that the government's most generous retraining program helped fewer than 8 percent of Oregon workers who qualified between October 2000 and October 2003 find jobs in the fields for which they trained.

State officials note that Oregon met most major program goals between July 2001 and July 2002, when 82 percent of retrained workers found jobs within three months that paid nearly as well as their old ones. But the program enrolled only about one-sixth of the laid-off workers who qualified, in part because money shortages, rigid rules and delays in benefit approvals discouraged workers from training.

Nationally, the program has performed even worse in recent years, with fewer than two-thirds of retrained workers finding a job within three months.

The program's deficiencies harm more than just the financial well-being of workers. If the public decides job retraining doesn't work, voters could turn against free-trade policies such as the North America Free Trade Agreement, experts say. Already, job retraining and trade-related job losses have emerged as a volatile issue in this year's presidential election.

John Kerry, the likely Democratic presidential nominee who accuses the Bush administration of cutting training programs, has pledged to end tax loopholes that encourage the export of jobs. President Bush, in turn, has supported outsourcing as good for business and says improvements in training programs made during his first term will help workers prepare for an economy that values innovation.

Opinion polls repeatedly have found that most Americans support free trade only if the government compensates workers who've lost their jobs to trade.

"That's really central," said Steven Kull, director of the University of Maryland's Program on International Policy Attitudes. "If you pose the question of trade without the option of some kind of mitigation, primarily for American workers . . . then you get a really divided response on trade. If the option of mitigation is brought in, then you can find consensus."

A survey released in January by Kull's program found that 63 percent of respondents thought the U.S. government hadn't done an adequate job retraining workers who lost their jobs to trade. That's an increase from 57 percent in 1999.

Nowhere during the recent recession was trade-related training more important than in Oregon, which had the nation's highest unemployment rate for much of the past three years.

The U.S. Department of Labor spent $38.7 million from October 2000 through October 2003 -- or $21 for every member of Oregon's work force, more per worker than any other state -- retraining people whose jobs left the country or wilted under foreign competition.

Nearly 20,000 Oregon workers qualified for the program's tuition and unemployment benefits, Labor Department statistics show. But fewer than 3,500 workers -- or 17.6 percent -- signed up for training, at an average cost of about $11,000 each, according to the Oregon Employment Department, which manages the program locally. One in four dropped out, and those who completed training, on average, got jobs that paid only between 80 percent and 92 percent of their previous wage, program statistics show.

Last month, the Bush administration sent three Cabinet secretaries on a two-day bus tour of Washington and Oregon touting federal job retraining as being a success. But workers give the programs mixed reviews.

Miller calls his training "a tremendous boost." But it hasn't been enough to offset the corporate trend toward moving jobs overseas. He blames his job-hunting woes on a stagnant market and the spread of outsourcing.

"If we don't have the higher-level jobs to retrain to, then the retraining is not effective," Miller said.

Even critics acknowledge the program's goal of placing 78 percent of participants in permanent jobs that pay 90 percent of their former wage is tough to meet. Predicting job growth, critical to placing workers in the right training programs, is an inexact science.

In August 2002, Congress made the most recent of at least three broad attempts to overhaul the program -- doubling its budget to $220 million, extending unemployment benefits and offering tax credits for health insurance for workers while they retrain. Bush has declared those changes a success.

"The old days of work-force training are now changing," Bush said a day after his State of the Union address in January. "It used to be they said, 'Look, just go train people." So states would go out and train 1,000 beauticians for 50 jobs. And there would be 950 beauticians without work."

Critics say Trade Adjustment Assistance training has not changed as much as Bush thinks. Recent reforms took hold too late to help most Oregonians retraining during the downturn, and department officials say they won't know for several years if the reforms are working.

More than a benefit for workers, critics say, the programs provide cover for politicians.

"It's kind of a low-cost, symbolic program that lets government say it's helping people out," said Gordon Lafer, author of "The Job Training Charade" and an associate professor at the University of Oregon's Labor and Education Research Center. "It kind of lowers expectations on government. For politicians, it gets them off the hook."

Minh Hoang, who in 1988 immigrated from Vietnam to the United States, discovered the difficulty of matching training with the job market after Seiko Epson Corp. moved his job from Hillsboro to Southeast Asia.

The 62-year-old father of five repaired and tested printer circuit boards for Epson, making $14.20 an hour before being laid off in August 2001.

At age 60, Hoang retrained as a beautician, joining dozens of other out-of-work manufacturing workers, many with limited English skills, at Portland Beauty School. Employment Department officials decline to discuss individual cases, citing privacy rules.

But Hoang said the Labor Department paid more than $11,000 for his tuition and supplies, along with 18 months of $400-a-week unemployment benefits.

He graduated in March 2003 and passed his state Board of Cosmetology exams. Hoang said he learned how to give facials, hair colorings, manicures and pedicures. "I know a lot," he said last summer through an interpreter.

Hoang said he chose cosmetology because friends were doing it, and he figured he could open his own shop. After entering school, he sensed there were more students than jobs. So, he decided to look for work providing better pay and health benefits for his family.

He now makes $10 an hour at Top Tier Inc., in Milwaukie, building electrical panels.

The Employment Department sent more than 500 workers to cosmetology schools during the state's three-year recession at a cost of more than $2.7 million, state records show, even though the department projects only 124 job openings in cosmetology-related fields each year through 2012. Of eight beauty school graduates interviewed by The Oregonian, only one had a job at a salon. Hoang was the only other one with a full-time job.

"To be honest, there's a lot of people going to these schools," Hoang said last summer. "When you graduate, there's not enough jobs to go around."

From the beginning, job retraining programs have been entwined with the politics of international trade.

Congress created the Trade Adjustment Assistance program in 1962 while authorizing President Kennedy to negotiate tariff concessions. Lawmakers changed the program in 1974 during the Ford administration and expanded it in 1993 during President Clinton's first term, when Congress approved Nafta. Its intent: re-employ workers who've lost their jobs to foreign imports or production shifts outside the country.

Yet even workers such as Michael Burright, who successfully retrain and enter new careers, usually find their new jobs pay less than their previous ones.

In some ways, the former worker on a Freightliner truck assembly line tapped into the best that federal training programs have to offer. He said he received more than $11,000 for tuition to retrain in the health care industry, one of few job sectors that economists agree likely will grow in coming years.

In September, two days into his internship at Concorde Career Institute in Portland, he landed a job as a medical assistant at Cascade Occupational Medicine on Swan Island. It's the same clinic where Freightliner once sent him after a truck cab came crashing down on his head, injuring his neck.

Burright, 35, used to be Freightliner's "default setting," he said, able to perform three dozen assembly line tasks before his layoff in February 2000. His dark hair, long stride and Size 13 feet earned him the nickname "Sasquatch."

His retraining benefits proved almost as elusive as the mythological Bigfoot. The Labor Department did not declare Burright and other Freightliner workers eligible for trade-related benefits until November 2001, nearly two years after they lost their jobs.

Burright said state officials told him the delay cost him as much as 12 months of extended unemployment benefits under the program. He decided he couldn't afford his first training choice -- nursing -- because the two-year community college program lasted longer than his regular unemployment benefits.

State officials declined to comment on Burright's case. But Bob Tackett, a worker advocate for Labor Community Services, said program rules require workers to be accepted for training within six weeks of a certification to get benefit extensions. Burright heard about the certification in the spring of 2002 and applied too late, Tackett said.

"That long delay, that was the killer," Tackett said, adding that other people faced the same situation.

Burright says he likes his new job and hopes eventually to pay for a nursing degree himself. The worst thing, he says, is the pay he now gets: $11 an hour, nearly half the $20.55 he got at Freightliner.

"We've had to really trim the fat," Burright said. "My daughter isn't getting all the toys she likes, but at least she's getting fed."

Burright discovered what researchers and Labor Department officials have known for more than a decade: Trade Adjustment Assistance does not lead to better wages. A 1993 study done for the department by New Jersey-based Mathematica Policy Research Inc. found no evidence that training improved participants' earnings or job prospects when compared with the wages and job histories of untrained, laid-off workers.

That same year, Congress expanded the program to help ease union opposition to Nafta.

Replacing workers' wages was particularly difficult during the latest recession. Many outsourced manufacturing jobs paid well and have not been replaced. From 1991 to 2000, the average pay of all Oregon workers increased 4.7 percent a year, slightly faster than the U.S. average of 4.4 percent, Labor Department statistics show. Between 2000 and 2002, the state's average pay growth slowed to 1.4 percent a year, below the U.S. average of 2 percent.

Oregon received more training money per worker than other states in part because the downturn socked its high-tech manufacturers. Many tech companies in the past three years shifted some jobs to foreign countries with lower labor costs.

The state's food processors, aluminum mills and timber-products industry also withered under foreign competition. All told, Oregon lost more than 54,000 jobs from late 2000 to late 2003.

Even with an increased budget, the trade adjustment program couldn't help all qualified workers.

The program ran out of money in 2001 and 2002, causing the Employment Department to suspend enrollments. Each time, the federal Labor Department took more than two months to respond to the state's request for more money, causing some eligible participants to look elsewhere for help.

Other problems with the program's management identified by participants and administrators in Oregon include: Federal labor officials took, on average, about three months to certify job sites for benefits, causing some workers to give up on the program or miss training opportunities. State officials acknowledge they struggled to find suitable training for laid-off workers with poor English skills.

Federal officials denied training benefits to software engineers whose jobs were outsourced overseas, saying the program only helps workers producing "articles." Steve Watson, a former software engineer in Hillsboro, has joined more than a dozen engineers nationwide in a class-action lawsuit challenging that interpretation.

The program's money shortages caused some qualified workers, including Thomas Krebs, to give up pursuing benefits altogether.

A longtime electronics technician, Krebs in April 2002 lost his job maintaining robots at Intel Corp. The chip-maker ended a contract with Krebs' employer, SCP Global Technologies, choosing instead to work with a Japanese firm.

When Krebs applied for Trade Adjustment Assistance, state officials told him they were out of money.

"I felt cheated," said Krebs, 57. "I could've been going to school and getting paid for it."

Many workers got on waiting lists and entered training two months later when more money became available, but an unknown number, including Krebs, gave up, state officials say. Congressional investigators in November criticized the Labor Department for dragging its feet when states asked for additional money.

Krebs survived 21 months unemployed by selling his Beaverton condo, pulling $7,000 from his 401(k) and giving up cable, his cell phone and garbage pickup.

Late last month, he got a job at Siltronic's Portland silicon-wafer manufacturing plant. While relieved to have health insurance again, Krebs will earn around half what he made at SCP. He doesn't mind being overqualified.

"I figure if I'm good enough, I'll work my way up," he said. "I need work."

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Researcher Lynne Palombo of The Oregonian contributed to this report.

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