In his acceptance speech at the Republican National Convention, Romney listed job training and education as step 2 of his 5-step plan to restore American prosperity, behind energy independence. So what kind of job training would he fight for? In this two-part piece, we’ll go into detail on the job training proposal that Romney embraces, and suggest ways that an emphasis on online job training could fit into conservative principles while providing better opportunities for job trainers to get the skills they need.

Like any presidential challenger, Romney’s official position on job training begins with a lengthy indictment of the incumbent’s policies. Current federal programs truly are inefficient and costly: the government spends $18 billion per year on 47 job training programs, 44 of which overlap with at least one other program. Perhaps worse, only 5 of these programs have been thoroughly evaluated since 2004. We recently did an in-depth report on Job Corps, the largest federal training program, which serves at-risk youth ages 16-24. We found that although the program spends $28,400 per participant, participants are likely to go into the same low-paying industries as their peers outside of the program. Further, we found that 8 years after completing the program, Job Corps participants make only $26 more per year than nonparticipants.

That’s not to say that Romney sees no bright spots for helping marginalized youth. He was one of the first investors in City Year, a nonprofit that places recent college grads in high-need public schools as mentors, tutors, and after-school leaders. Romney’s company, Bain Capital, has been the only one to sponsor a City Year team every year since the organization’s founding. In 1995 and again in 2003, Romney worked to gain government support for the program, first lobbying Republic senators in the Clinton era and then urging 41 fellow governors to sign a letter to President Bush urging continued federal funding. On September 25 of this year, President Clinton thanked Romney for these efforts at the Clinton Global Initiative’s annual meeting. Yet at a New Hampshire town hall last December, Romney falsely pawned these positions off on Clinton, saying of his own time on the City Year board, “I always said to the other board members, don’t get too attached to government funding. In my view, we should keep this as a privately funded, charitably funded effort.”

So what would Mitt Romney do about job training if elected president? The only specific policy initiative listed on his website is the establishment of Personal Reemployment Accounts (PRA’s). Just as vice presidential candidate Paul Ryan’s budget proposal would give senior citizens voucher payments to purchase private health insurance or Medicare, PRA’s give unemployed people money to purchase private or public job training services. But the incentives embedded in the program are stranger than you might think.

According to a study of the policy published by The Urban Institute on October 2, the proposal was developed in 2003 by Columbia economist R. Glenn Hubbard, the Chairman of the Council of Economic Advisors under George W. Bush and a current Romney advisor. It was brought forward by a Republican House of Representatives that same year, although it was never enacted.

Under the proposal, unemployed workers would receive personal accounts of $3,000 to help move back into the workforce. The account holder could use as much of this money as she chose on the job training services of her choice, and receive the balance of the money as a sort of signing bonus if she found a job within 13 weeks of signing up for a PRA. In other words, as an account holder, you could either spend $2,500, find a job, and get a $500 bonus, or spend $500, find a job, and get a $2,500 bonus. Of course, in a sort of worst-case scenario, you could spend $3,000 on training, not find a job, and get no bonus. Yet a 2004 PRA pilot program in 7 states, begun in an effort by the Bush Administration to validate the proposed policy, showed that this was far from likely. In fact, a great majority of PRA recipients didn’t use any of the money on job training, opting instead to use it on support services like childcare or to take a larger bonus. And you can’t blame them- $3,000 is a lot of money, especially for those without a job, and PRA recipients are incentivized not to get job training in order to take home a bigger chunk of that money in cash.

Personal Reemployment Account Demonstration Project

This table, taken from the Urban Institute’s study of Personal Reemployment Accounts, indicates that in the states where the program was piloted, participants spent just 10% of the money on training services. The bulk of the money was used for support services or a bonus check.

The Urban Institute makes several recommendations on how best to improve the PRA proposal. The one that we most agree with is that the training allowance and the signing bonus should be decoupled- in other words, people who spend more money trying to learn new skills shouldn’t be punished with a smaller bonus. The Institute also recommends that the training portion of the account be set at $5,000 or more. We’re all for more money in job training, but fiscally-conservative Romney hasn’t said anything indicating he’d be willing to increase spending on the program- indeed, he hasn’t said much at all about PRA’s, despite the fact that the current proposal is 9 years old and plays a key role in Romney’s campaign.

But here at SkilledUp, we try to be constant optimists. We’re confident that anyone can get quality job training skills on any budget. So in the next piece of this report, we’ll look at the ways that out-of-work Americans could best use the $3,000 offered in a PRA.