Corporate Welfare?

Thanks to provisions in the federal Job Training Partnership Act (JTPA), companies like SER who operate local workforce centers are in the business of serving not only the economically disadvantaged but large corporate clients as well. That's because the JTPA obligates the Texas Workforce Commission (TWC) to "make appropriate retraining and basic readjustment services available to eligible dislocated workers" who have been laid off by large companies. In 1998, the TWC spent about $340,000 in state and federal funds to help companies such as Applied Materials, AT&T, and PCA/Humana cover the costs of severing their employees.

The latest recipient of TWC's assistance is high-tech equipment manufacturer Applied Materials, which in August cut 600 jobs at its Austin plant as part of a larger, national downsizing. At other company locations, such as Santa Clara, California, Applied Materials hired private career counseling consultants to set up various seminars and resource centers that help laid-off employees find new jobs. In Austin, however, Applied Materials received those same services free of charge by contracting with the TWC. A local workforce center on North MoPac with computers, free long-distance calling, and fax machines was dedicated for use by former AM employees, and consulting companies were paid by the TWC to do résumé and career counseling. Asked how much money his company saved by contracting with the TWC, Applied Materials human resources director David Hughen replied that his budget was too small to provide the extensive job transition services that AM wanted for its employees. "That's where TWC came in," says Hughen. "These were taxpayer dollars there for just that very purpose, and it filled that gap very nicely. ... It would have saved us money if we'd had the money to spend in the first place, [but TWC] provided a service that we could not have given otherwise."

But the competition from TWC has not gone unnoticed by the private career consultants who would normally be hired to handle job transition programs for companies doing layoffs. "Why am I in a position of competing with that entity?" asks one self-employed consultant. "It's an unequal playing field. Who can compete with no charge?"

Says another: "Why should a large company who's doing a layoff use federal money for their employees when they can pay a company to do that? Why should my tax dollars pay for someone else's mistake?" Both counselors refused to use their names, fearing business repercussions in the small, competitive field of job training. Staff members for the local board in charge of adminstering TWC programs, however, respond that what they do is mandated by law and ultimately benefits more private vendors by spreading the work around.

Consultants would probably not feel as threatened by TWC programs, however, if TWC money were spread around a bit more. In the AM contract, as it happens, seven consulting companies got slices of the pie -- but only because the entity in charge of overseeing TWC-funded programs, the Capital Area Workforce Development Board (CAWD), bypassed the usual vendor, SER, because of the company's alleged misconduct. A former SER employee says that typically the company, as manager of the local workforce centers, was hired to handle all layoff contracts, and provided all services in-house. CAWD board staff member Bob Sonnier confirms that SER had an arrangement with the board to be the management consultant on all layoff contracts, an agreement Sonnier says would be typical of any work center vendor.

CAWD executive director Martin Aguirre doesn't deny that it's a tight ring of consultants, most of them former government administrators, who manage corporate contracts. "I am relying on a small set of consultants who have done this before, and yes, many are former government employees," says Aguirre. Aguirre would not speculate, however, whether SER might have failed to hit its performance goals for its poorer clientele because it was focusing on corporate contracts. -- Kevin Fullerton