ANALYSIS: New ‘Workforce Development’ Bill

WHEN DOES ‘WORKFORCE DEVELOPMENT’ BECOME CENTRAL PLANNING?

Update: This bill was amended and much was taken out from the original legislation. The Council is now essentially a glorified study committee, which will “make recommendations to the General Assembly concerning matters related to workforce development.”

The term “workforce development” refers – usually – to government-funded programs to train workers for specific industries. Since employment is a good thing, and since skilled workforces make economies more likely to grow, “workforce development” is generally considered to be a good thing.

But the concept raises some very basic questions. Why, for example, should government train workers for the industries it chooses? Do government officials really know which industries or sectors will need more trained workers in the future, and which won’t? Wasn’t that once known as central planning? And – at the most basic level of principle – why are taxpayers obliged to pay for worker training rather than the companies that want to hire the workers?

The plan

These and similar questions arise in relation to bill currently in the General Assembly, H.4145, that would create a “Workforce Development Council.”

This Council would be comprised of the heads or former heads of many powerful state agencies:

  • the Department of Education
  • the Department of Commerce
  • the State Board for Technical and Comprehensive Education
  • the Department of Employment and Workforce
  • the Commission on Higher Education

To assist this group, the bill creates an advisory group of workforce development “stakeholders” chaired by the Secretary of Commerce and comprised of representatives of even more state agencies, as well as non-profit organizations and some businesses with more than 50 employees. The advisory group is tasked with attending Development Council meetings and providing input.

The Development Council’s primary role would be to create a “comprehensive plan” for workforce training and education, and to develop a plan to ensure there is an adequate number of health care workers. The Development Council would make recommendations to the Executive Budget Office (EBO) on the budget requests for operating agencies of the state training system. The comprehensive plan would also include recommendations to the General Assembly and governor on the workforce development programs in South Carolina, including possible new programs.

To help evaluate the plan, the Development Council would develop a database on:

  • career and technical education enrollments,
  • costs,
  • program activities, and
  • job placements from publicly funded career and technical education programs.

The Development Council would establish standards for data collection, and the minimum core data each agency (including the Department of Education) should collect.

Finally, the Development Council would periodically assess the state training system with scientifically-based outcome and net-impact and cost-benefit evaluations.

Existing agencies would also be given new responsibilities by H.4145:

The Department of Commerce (DOC) would be required to establish marketing programs, and facilitate private sector assistance for the state training system by investigating and implementing effective co-investment models.

The State Board for Technical Education would facilitate the development of “school-to-work transition programs,” ensure coordination between agencies in the training system, and advise the Development Council on policies and programs to address unemployment among young people.

The Department of Employment and Workforce (DEW) would oversee implementation of the Workforce Investment Act, and participate in the planning and policy development of Governor set-aside grants under The Job Training Partnership Act.

On a broader level, the new Development Council and other operating agencies would adopt rules and regulations to implement this law.

Local workforce development councils and elected officials would also be instructed to develop unified local workforce development plans and submit them to the Development Council for review, and the Governor for approval. This bill would also create the “Pathways to First Careers” and “Pathways to New Opportunities” programs tasked with subsidizing career training programs (particularly programs that train individual for careers in industries with critical workforce shortages) for students and adults respectively.

To further assist these programs, the State Board of Technical for Technical Education would administer a new Workforce Scholarships and Grants fund to provide scholarship funding for South Carolina residents who are eligible to be enrolled in a South Carolina technical college or professional certification program to pursue career education through eligible programs. Taxpayers would be eligible to claim a career pathways tax credit if the taxpayer creates a registered apprenticeship as defined in the National Apprenticeship Act (claiming this tax credit would disqualify them from the apprentice income tax credit already authorized by law).

Analysis

H.4145 would lead to increased spending at all of the agencies discussed above, and create a new tax credit for funding apprenticeships. The proposal falls just shy of complete central planning of South Carolina’s labor force.

Heads of government agencies cannot accurately predict the natural growth of various industries in our state and their future demand for workers. Attempts to push the state’s future labor force into favored industries will almost certainly result in a surplus of workers in some industries (meaning unemployment and reduced wages) and a shortage in others. Both outcomes will combine to hinder overall economic growth.

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