Georgia's Celebrated No-Cost Labor Scheme: Cheating the Jobless?

For a typical boss, there's only one thing better than getting away with not paying your workers: getting the government to supply you with people who will work for free. It's an employer's dream that may soon become reality around the country, as President Obama has moved toward incorporating it in his emerging job-creation agenda.

The job-creation flavor of the week is GeorgiaWork$, a job program that has for several years funneled unemployed workers into job slots as "trainees." Under this half-internship, half-indentured servitude scheme, a worker can earn a $240 weekly stipend on top of regular unemployment benefits for eight weeks, working 24 hours per week. Unlike other job subsidy programs, which use generally use public dollars to supplement workers' regular earnings, GeorgiaWork$ allows the state to capitalize on existing unemployment payments while giving a free boost to private employers. Workers, often hired in service sectors like child care and restaurant work, can only hope that their bosses will hire them after their preliminary test run ends.

This system fits well with Obama's anti-spending, quasi-pro-stimulus double-speak, and his forthcoming jobs plan may include a federal version of Georgia's virtually free labor system.

While there may be many desperate people ready to forfeit labor standards for any form of paid work, the Huffington Post reports that so far, the program doesn't seem to live up to its promise of sustainable job growth:

From its 2003 launch to the end of 2010, some 30,866 trainees entered the program, according to data provided to HuffPost by the Georgia Department of Labor. Of that total, 5,089 workers -- 16.4 percent -- were hired by the company that trained them during or at the end of the training period. (The department says that among workers who completed the full eight-week training, the employment rate is 24 percent.)

How does this success rate stack up to the overall rate at which once-unemployed Georgians have gone back to work? It's probably in the same ballpark.

Census Bureau data show that in 2007 and 2008, 15 percent of Georgians who'd been out of work for six months or longer found work within one month of a survey, according to Jesse Rothstein, an associate professor of economics and public policy at the University of California at Berkeley. In 2009 and 2010, the number fell to 10 percent.

Legally speaking, as we reported last year, GeorgiaWork$ might chafe against federal regulations on training employment versus regular work. Under Labor Department rules, vocational training programs must ensure that "The training is for the benefit of the trainees," "The trainees do not displace regular employees," and that "The employer... derives no immediate advantage from the activities of the trainees."

The National Employment Law Center points out the Georgia Work$ model, which has been replicated in several other states, makes it too easy for employers to cross the line from education to exploitation.

NELP staff attorney George Wentworth told NPR:

The activities that the workers are engaged in are basically employment, which means they should be entitled to the minimum wage and should not be working off their unemployment insurance benefits.

There are other ways the government can connect people to the labor market without creating a separate tier of underpaid workers. One approach with proven results is a program under the TANF Emergency Fund that used federal stimulus funds to subsidize wages in the private sector. The system "[p]laced more than 260,000 low-income adults and youth in paid jobs during a time of high unemployment" while helping participants build real skills, according to a report by the progressive think tanks Center on Budget and Policy Priorities and CLASP.

The program could have helped many more families if it hadn't expired last September. GeorgiaWork$, on the other hand, seems to be sputtering even in its short-term mission of supplying a cheap temporary workforce. According to Huffington Post:

Enrollment in the program slowed drastically this year after the state labor department cut the stipend from $600 to $240 and restricted access to only those workers receiving unemployment benefits (it had been opened to nonrecipients in 2010). As of this week the program boasts just 19 trainees.

In other words, although GeorgiaWork$ looks like a steal for employers who want cheap labor, when it comes to helping people make a dignified living, there's no free lunch after all. Maybe the unemployed aren't as desperate as officials hoped; they might have just enough pride left to insist on an honest day's pay for an honest day's work.