This paper explores the role that One-Stop Career Centers play in helping the unemployed build new skills and find new jobs. Each year, One-Stops provide about 15 million workers with information about the characteristics of available jobs, strategies to land the best possible new jobs, and the benefits and costs of enrolling in training programs. Such services help workers rebound from cyclical and structural job loss in ways that foster long-term growth.
Unfortunately, One-Stops have been hobbled by sharp reductions in funding and counterproductive federal performance measures and regulations. Since 1990, funding for One-Stops has fallen by 33 percent, while the labor force has grown by 23 percent and the probability of job loss has increased by 33 percent. As a result, many workers fail to get the help they need from One-Stops—help that would substantially reduce their adjustment costs.
This paper proposes introducing new performance measures that would make better use of existing resources and thereby expand One-Stop capacity to help more workers. In addition, the new accountability system, which could rapidly be put into place at low cost, would increase incentives to provide the most cost-effective services, as measured by higher worker wages, increased tax revenues, and reduced taxpayers’ expenditures for unemployment insurance benefits.
This paper also recommends increasing One-Stop annual funding from $4 billion to $8 billion in two phases. These expenditures would provide high-quality job search assistance and training to an additional 5.6 million job seekers. Of the additional $4 billion required, $2.5 billion could come from unemployment insurance trust funds if laws were changed to permit cost-effective investments in active labor market programs. The remainder could come from permanent increases in Workforce Investment Act funding. These investments, when accompanied by a new accountability system, are estimated to return $3.9 for every $1 spent. Not only would they increase labor market efficiency by reducing unemployment, but also they would provide the more highly skilled workforce needed to spur economic growth when the current recession ends.