President-Elect Trump and California Employment

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

bernick_infrastructureWhat will Donald Trump’s election mean for California employment?

Let’s start with a caveat: it is too early to tell in any detail. Trump has never held office, and we don’t yet know how his employment policies will play out. Certainly, the dire warnings in the past two weeks by the CNN and MSNBC commentators are without foundation.

What we do know is that during the campaign, President-elect Trump put forward several ideas for large scale job creation/training initiatives. Each of these ideas should be taken seriously and call forth far more discussion in the next few months.

These ideas are beyond the strategies of personal and corporate tax reform and reform of trade policies that make up the more advertised part of Trump’s jobs program. Three strategies Trump set out are worth highlighting:

  • A trillion dollar infrastructure jobs program.
  • A major inner city investment program.
  • An expanded job training program, especially for Veterans.

. Here’s a brief review of these strategies, and an additional strategy that should be added regarding our millions of workers with developmental differences.

1 — Trump’s infrastructure investment: Infrastructure investment is an employment approach that both candidates put forward. Candidate Clinton proposed a $275 billion infrastructure investment–“the boldest investment in American infrastructure since Eisenhower built the interstate highway system” she termed it. Trump went further, upping the investment to $1 trillion over 10 years.

Though job creation through infrastructure still is thought as the Works Progress Administration (WPA) of the New Deal, we’ve had several major infrastructure jobs programs in the more recent past. These include the public works components of CETA public service employment during the latter 1970s, the Emergency Jobs Act of 1983 and most recently the large scale public works projects under the Obama Stimulus, the American Recovery and Reinvestment Act (ARRA)of 2009.

What we learned under all of these, and especially under ARRA is that federal funding can spur hiring, and that “shovel ready” highway, transit, airport, and levee projects can be completed in a matter of years. However, the cost per job linked to these projects is not inexpensive. The Obama Administration took very seriously the tracking of jobs under ARRA and estimated that each $1 billion in highway and transit investment supported 13,000 jobs for one year—13 jobs per million. Further, this estimate was a generous one, including not only the direct and indirect jobs (roughly 64% of the job years) related to construction, but also “induced jobs” (roughly 34%).

We also learned under ARRA that project selection in infrastructure, including energy infrastructure, can be easily corrupted by politics (Solyndra, Fisker Automotive), that the lobbying community that Trump has denounced was considerably enriched by ARRA project selection, and that project oversight was uneven. The challenges of a Trump infrastructure program lie not in the concept, as much as the selection and implementation details.

2 — Trump’s inner city investment: In a speech on October 26, candidate Trump set forth a vision of a “New Deal for Black America”. Though it had a range of education and anti-crime ideas, the focus was on job creation in urban areas with high African American populations. Strategies included tax holidays for inner city investment, and tax incentives “to get foreign companies to relocate in blighted American neighborhoods”, and “financial reforms to make it easier for young African Americans to get credit to pursue their dreams in business and create jobs in their communities.”

Since I started in the job training field in 1979, every year there have been calls for greater inner city investment. The programs created, though, such as the Enterprise Zone tax credits, have had limited impact–the tax credits used mainly by firms already locating in these areas, encouraged by a whole industry of tax credit consulting firms. Highly hyped inner city business development theories from think tanks and universities, such as ones by Harvard Business School professor Michael E. Porter, have proved to be empty. So this is a topic that one addresses cautiously.

Still, why not a new approach by President Trump. Trump, with experience in business, can bring fresh eyes to the challenge of expanding African American entrepreneurship and business ownership. It’s past time to shake up thinking in this area, and there is much to be done.

3 — Trump’s expanded job training, starting with Veterans: During the campaign, Trump had less to say than Clinton on the workforce system. But he did highlight increased funding for job training and placement services and business loans for Veterans.

To be sure, the workforce system today does give highest priority to Veterans. At virtually every local Workforce Development Board (WDB) throughout the United States, Veterans is a group that is first in line in spending decisions. Still that doesn’t mean that more could not be done regarding employment transitions for Veterans, or for the broader workforce system.

In the training field, the Trump Administration will inherit a job training field that finds its strength in the hundreds of local WDBs. These WDBs know their local labor markets, know their job seekers and think very pragmatically. It is to their staffs and practitioners that the Trump Administration should look for guidance.

4 — Trump and workers with developmental differences: Finally, to the three ideas above, I would add fresh thinking by a Trump Administration to address the estimated unemployment rates of 65% or more for the millions of adults with developmental differences in the United States. The Obama Administration did more than previous Administrations in highlighting the unemployment of workers with developmental differences, and taking measures to address this unemployment: re-setting the foundering Ticket-to-Work program of job placement incentives, improving the work incentive structures under Social Security Disability Income and under Supplemental Security Insurance, and adding targeted “disability” employment efforts. But more than 25 years after the passage of the Americans with Disabilities Act the estimated unemployment rate of workers with developmental differences is as high or higher than in the early 1990s.

The campaign is over. As President Obama noted last week, all of us have a stake in reducing joblessness.

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