Would $3,000 Help You Find a Job?
Sept. 18, 2003 -- Unemployed since January, Juan Casero was excited to receive a call recently from a human resources manager who showed interest in him for a position at the U.S. District Court in Des Moines, Iowa.
But Casero, who lives in Hialeah, Fla., could not afford to pay the travel expenses he needed to get to the interview, so he had to pass on the opportunity.
Casero is one job seeker who says he would welcome President Bush's proposed plan to give unemployed people who are having a difficult time finding work $3,000 to get a jump-start on finding a job. The plan to create "personal re-employment accounts" is one solution the president has been championing to help the unemployed get back on track.
The proposal, also known as the Back to Work Incentive Plan, drew a lot of attention this spring, when the House Education & the Workforce Committee approved the legislation. Since then, budget concerns have put the proposal on the back burner. But the president has been mentioning the proposal in recent speeches about the state of the economy.
"These accounts will provide a job seeker with up to $3,000 to pay for training, day care, transportation, relocation expenses, whatever it takes to find a new job," Bush recently told an audience in Kansas City in a speech on the economy. "And if they find a job quicker than the allotted time for the $3,000, they get to keep the difference between what they've spent and the $3,000 as a re-employment bonus."
How It Works
The plan, as it's proposed now, would work like this: Individuals who are receiving unemployment and are identified by their state as likely to exhaust those benefits would be able to get up to $3,000 to help purchase services such as job training and employment counseling or support services like child care, transportation or housing assistance. People whose unemployment benefits had expired within the previous 180 days would also be eligible for such an account.
Recipients have up to a year to use their funds, but if they found a job within 13 weeks of establishing the account, he or she would receive 60 percent of the remaining balance. The person would get the other 40 percent after being at the job for six months. So, the faster the recipient found a job, the more extra money he would receive.
To make sure beneficiaries were spending the money on looking for work, they would get their funds through the national One Stop Career Center system, which would either reimburse them for their job search expenses or pay for them directly.
Around 1.2 million Americans would benefit from the accounts, which the government estimates would cost $3.6 billion.
"These accounts, if Congress will act, it will help more than 1 million of our fellow citizen receive the training necessary to become employable, to be able to fill the new jobs of the 21st century," Bush said in Kansas City.
Will the Money Really Help?
Despite the president's optimism, some economists and even some job seekers themselves doubt that a cash infusion, however necessary, would help more Americans find work amid a dismal employment environment.
"I don't necessarily think this is a bad idea," says Harry Holzer, professor of public policy at Georgetown University in Washington, D.C. "We shouldn't think of this as something that's going to lead to job creation, especially in a downturn."
Since the recession officially ended in November 2001, the U.S. economy has lost around 1.3 million jobs, and about 2.76 million jobs have been lost since the beginning of the recession in March 2001.
Around 8.9 million people were unemployed in August, according to the latest figures from the Bureau of Labor Statistics. But many economists say the number of people out of work is probably higher since the figures don't take into account people who have stopped looking for work, or discouraged workers.
Gillian Brody has been out of work since moving to Atlanta from Philadelphia two years ago with her fiancé. Discouraged by the job environment, she says she's stopped looking for work altogether and doesn't think $3,000 would change her situation.
"It doesn't create a job that doesn't already exist out there," she says.
Critics also note that a narrow range of people would be able to benefit. Those who don't receive unemployment benefits, like Casero, who left his job in January because of a personal conflict, and Brody, who doesn't qualify since she left her job to move, would not benefit from the accounts.
How They Would Spend It
For those who would receive the accounts, how far would $3,000 go in a job search? The answer to that depends largely on each job searchers' needs and methods of looking for work.
Job seekers' costs can include anything from paying for monthly Internet service to career counseling to child care to buying a new suit for an interview.
Verna Stroud, a 46-year-old unemployed health-care worker from El Paso, Ill., says she would use the money to update her wardrobe or help her travel to interviews. She says she's been keeping the cost of her job search down by using the Web for job leads.
"With me being out of work for a while, of course my wardrobe is no longer what I would consider appropriate to go into an interview with," says Stroud, who has been out of work for almost a year.
Indeed, given the increasing amount of time that people are finding themselves out of work, the search potentially can become very expensive. The average number of weeks that unemployed people have been looking for work was 19.1 weeks in August, compared to 16.3 weeks in August of last year.
Frank Vizza, a 46-year-old software developer who's been out of a job for a little over a year, says he spends roughly six hours a day on his job search. He says he's not sure how much he's spent on his job search, but he's getting increasingly nervous about how to support his five children and make payments on his home in Lake in the Hills, Ill., around 45 miles outside of Chicago.
"The answer is not $3,000," he says. "The answer is turning this whole economy around."
Finding Work in a Changing World
Still, others say getting some money for training would go far in getting some unemployed people ahead in an ever-changing economy. For example, with so many manufacturing jobs being lost — the manufacturing sector has shed 16 percent of its jobs since July of 2000 — many workers have to update their skills.
"Realistically, people are going to get some training or education, because some jobs have just left and they're not coming back," says Peter Manzi, a career counselor with Career and Educational Development Enterprises in Rochester, N.Y., and a trustee for the National Career Development Association, a Tulsa, Okla.-based career development trade group.
John Challenger, chief executive of Chicago-based outplacement firm Challenger, Gray & Christmas, recommends that recipients use the money to enhance their existing skills, travel to other cities for job interviews or for job training courses in the evenings (daytimes should be used for the job search, he says.)
"What's good about money is if it goes to people who don't have much in savings who need the money, it gets back into the economy more quickly," says Challenger.