President Bush has proposed spending $3.6 billion over two years for states to create "re-employment accounts" of up to $3,000 for about 1.2 million people collecting unemployment compensation who are having difficulty finding jobs. The money could be used to pay the costs of looking for work, such as job training, transportation, child care and moving expenses.
Some economists praise the proposal as an innovative way to move people off the unemployment insurance system, thereby saving money. Others say the program might encourage people to accept jobs they normally wouldn't take.
A "re-employment account" conjures up a wish list for Michele Wylie, 33, of New York City, who has been unemployed since May.
"It sounds like a good deal, especially for a person who would like to make a career change," said Wylie, who has a 5-year-old son. "It would give you a little bit more confidence."
One job she has applied for, to work at a preschool, requires her to get a medical checkup. A re-employment account could pay for that. For another position, as an administrative assistant, she must take a test. The account could pay for study guides or prep courses, or even child care for her son while she's taking the test.
People who find jobs within 13 weeks and hold them for at least six months could keep the balance in the account as a bonus. The program could be running within two months after receiving approval and funding from Congress, said Emily Stover DeRocco, assistant labor secretary for employment and training.
The Labor Department in the late 1980s tested a pilot program of re-employment bonuses in Illinois, Washington, New Jersey and Pennsylvania, and results showed that people found work more quickly if a bonus was offered as incentive, DeRocco said.
"This administration believes deeply in individual choice, in having some faith in individuals to know what they might need most directly to help their return to work," she said. "The concept of an account ... was an important principle when we looked at how to expand the bonus idea."
But some advocates of the unemployed fear the re-employment accounts program is only a precursor to Republicans' true aim: dismantling job training programs and grants under the Workforce Investment Act established in 1998 under President Clinton, which Congress must reauthorize this year, and later the entire unemployment insurance system.
"It's voucherizing. It's privatizing," said Maurice Emsellem, public policy director for the National Employment Law Project, a New York City-based liberal advocacy group. "There definitely is major concern out there."
States, which will receive funding grants based on unemployment levels, will set up and administer the program through existing One-Stop Career Centers. They also will determine qualifications and how much money people may receive, up to $3,000.
Some states might use "smart cards" to let people access their accounts. Other states could set up programs, such as transportation services, and use the grant money to pay for that instead of giving it directly to jobless workers. Still, others may require workers to submit receipts for reimbursements. Controls will be in place to prevent abuse and fraud, DeRocco said.
State flexibility is one of the reasons economist Bill Conerly is excited about the program.
"They will have the opportunity to innovate and improve the benefit for their residents' unique needs, unlike the rigid traditional unemployment insurance system," said Conerly, of Conerly Consulting in Portland, Ore., and a senior fellow at the National Center for Policy Analysis, a conservative think tank.
But Emsellem said the proposal advances a "very disturbing philosophy," which is that unemployed workers "should be able to find a job if they look hard enough. That assumes there are jobs out there to get," he said. Or, they will be encouraged to accept the lowest-paying jobs, "which is cruel policy," he said.
About 1 million people currently have exhausted their state and federal unemployment benefits, and an additional 250,000 will see theirs expire each week, Emsellem said. The accounts, which still must get congressional approval, won't be available for months and won't help those people.
"That's a core problem," Emsellem said. "The program is flawed as it applies to the needs of the long-term jobless."
By Leigh Strope