Tad DeHaven

The Reason Foundation’s Adam Millsap and Anthony Randazzo have an op-ed up at RealClearPolicy.com that cites examples of how federal job training programs are used to favor particular commercial interests. A snippet:

Crony capitalism is when private interests collude with government to acquire subsidies or economic benefits that give them an advantage in the marketplace. Many job-training programs, such as the “On the Job Training Program” (OJT), serve just this purpose.

In many cases, the OJT program provides subsidized job training for specific jobs in specific areas—because the funds are limited, only certain employers will get the money. For example, in 2009, the OJT program provided a 50 percent salary subsidy to train chemical composite technicians for Renegade Materials in Dayton, Ohio. The company and workers both benefited from the program, but the subsidy provided Renegade with an advantage over its competitors, who did not benefit from free taxpayer money.

Similarly, Canadian company Energuy built its U.S. headquarters in Sacramento, Calif., to be near an OJT program called JobLink. Energuy, which hires workers to evaluate the energy efficiency of home appliances, has been expanding in other parts of California as well, specifically targeting areas that have subsidized training. The company has become so dependent on the availability of training subsidies that, according to its president, Energuy has “actually had meetings where we’ve said we’ll only move forward if we can get a subsidized employee; otherwise we’ll have to wait until we’re financially ready.”

Sometimes job-training subsidies help a range of firms in a particular industry, as was the case with the $22 million used to help lobstermen in the Northeast improve their businesses with government-funded business-plan training in 2010. These subsidies favor people currently in business over those who might want to enter the industry.

Tad DeHaven

Tad DeHaven is a budget analyst at the Cato Institute. Previously he was a deputy director of the Indiana Office of Management and Budget. DeHaven also worked as a budget policy advisor to Senators Jeff Sessions (R-AL) and Tom Coburn (R-OK).