Shutdown, Sequester Hit Workforce Programs

October 23, 2013 |  |  Link to article

By Neil Ridley

Last week, President Obama signed legislation that averted a potentially disastrous default and reopened the federal government after a 16-day partial shutdown. Federal employees who had been furloughed went back to work and a wide range of programs that benefit low-income people returned to normal.

In addition to the economic costs, the shutdown affected workforce programs that help people prepare for work, find jobs and build the skills they need to compete in a tough job market. As a result of the shutdown, the U.S. Department of Labor was unable to distribute a round of funding for workforce services that states were expecting to receive on October 1. Some states were able to use prior year funding, secure other sources of funding, or obtain advances from local jurisdictions during the budget stand-off. However, a number of local areas across the country took the drastic steps of furloughing staff, reducing the hours of counselors and other staff who deliver workforce services, and curtailing enrollments in training and other services that help people get back to work.

The shutdown compounded the effects of across-the-board funding cuts that had gone into effect as part of sequestration. The sequestration cuts amounted to about $460 million in 2013 for workforce programs, on top of about $1 billion in cuts since 2010, according to the National Skills Coalition. Starting in March 2013, sequestration resulted in a reduction in workforce training—notably a drop in Individual Training Accounts available to individuals seeking skill development—and cuts in staff available to assist unemployed workers and low-income job seekers, according to a survey conducted by the National Association of State Workforce Agencies. Sequestration reduced the level of federal unemployment benefits that support people who have been out of work for six months or more and who are seeking jobs in a sluggish labor market.

Just as the shutdown disrupted the flow of federal funding in the days following October 1, it also imposed less visible opportunity costs on workforce programs and the communities they serve.  Some local administrators spent time grappling with a lapse in funding rather than improving services to job seekers or helping businesses find the qualified workers they need to expand.  Instead of helping workers and businesses retool for long-term growth, administrators were thrown into short-term crisis management.

Having ended the shutdown, Congress has set another deadline—January 15—for agreeing on FY 2014 funding for discretionary programs. The budget conference has until December 13 to report back on a plan to reconcile vastly different House and Senate budgets. The September jobs report—itself delayed nearly three weeks due to the shutdown—showed that only 148,000 net new jobs were created last month. At this rate, it will take until 2022 before the U.S. economy returns to pre-recession levels of employment while absorbing new entrants to the workforce. Workforce programs and other programs that serve low-income people and unemployed workers need stability in funding, not continued cuts due to sequestration. We need investments to support job creation and economic growth, not ongoing budget uncertainty and another round of crisis management when the next deadlines hit.

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