Trump’s Big Department of Labor Cuts Will Affect the Most Vulnerable Americans

From The Century Foundation:

by Andrew Stettner

President Trump is out with his FY 2018 budget blueprint. The first “skinny” budget is remarkably scant on the details, even for a first-term president.

What’s clear is that Trump has proposed historic cuts to domestic spending priorities to fund his $54 billion expansions to defense and security related spending, with double digit percentage cuts to the budgets of the U.S. Departments of Agriculture, Transportation, Education, Health and Human Services, Housing and Urban Development. The budget takes square aim at the heart of anti-poverty programs, eliminating the community services block grantand community development block grants and zeroing out the Low Income Heating Assistance Program.

While it has not been the focus of pre-budget attention, the Department of Labor (DOL) is slated for one of the largest cuts of any agency. The budget would be slashed by 20.7 percent, second among domestic agencies to the Environmental Protection Agency (cut by 31.4 percent) and on par with the Department of Agriculture (cut by 20.7 percent).

The budget blueprint for DOL is short on details about how the administration proposes to shrink the budget by $2.5 billion dollars. Its largest targets are the employment and training programs of the Department of Labor, with the administration proposing a budget that “decreases federal support for job training and employment service formula grants, shifting more responsibility for funding these services to states, localities, and employers.” The budget also cuts programs that are smaller in scale.

The Largest Labor Cuts of Trump’s Budget

  • The budget slashes education and jobs/skills training, which the nation’s commitment overall has already wavered on, with cuts of $1 billion since 2010. The bipartisan Omnibus budget passed in FY 2016 increased funding for Workforce Innovation Act formula grants by $100 million—but still well below the authorized level of $3 billion authorized when these signature DOL programs was reauthorized in 2016. These grants provide short- and medium-term training for workers who have been downsized from their jobs (dislocated workers), low-income adults struggling to gain living wage employment and opportunity youth left behind by our nation’s educational system, as well as tools for individuals to search for and be matched to jobs. All told, these programs serve more than 6.5 million Americans per year.While Trump’s budget document includes a welcome recognition of apprenticeship programs, any increase in apprenticeship is likely to pale in comparison to cuts to formula grants.
  • The budget also targets job search assistance and job matching employment service grants (like Wagner-Peyser). Despite evidence of their effectiveness at shortening duration of unemployment benefits and thus saving government funds, these programs have long been targeted for significant reductions. This core infrastructure has been cut from $1 billion in 2001 to $680 million in FY 2016, and appear headed toward deeper reduction. Trump’s blueprint discusses increases to “Reemployment and Eligibility Assessments,” a smaller special program targeting unemployment insurance claimants profiled as likely to exhaust benefits, but this will likely be unable to fill the hole left by further employment service cuts.

Smaller Labor Programs Impacted by the Budget Cuts

  • The budget eliminates the $434 million Senior Citizen Community Services Employment Program, which provides short-term subsidized employment to low-income seniors (55+) who are much more likely than younger workers to suffer from long-term unemployment, often due to age discrimination in the workforce.
  • It also reduces the the number of sites of the $1.6 billion Job Corps program, a popular program that provides intensive work experience, life skills, and training to 50,000 out-of-school youth in residential and non-residential settings.
  • Other parts of the DOL budget are even less clear. The blueprint singles out $11 million Occupational Safety and Health Administration Susan Harwood training grants, which assist organizations serving workers in industries with the highest risk of industries. These grants have served as a unique model of community-government collaboration worthy of replication in other area; it’s the type of program that can save lives and save money by reducing workplace injuries and workers compensation claims. Furthermore, it would be unsurprising if the final budget amount does not include a reduction in funding for core areas of enforcement, like wage and hour, which had been modestly boosted by President Obama. Finally, the budget says nothing about unemployment insurance programs, for example, which depend on the Department of Labor budget for $2.7 billion for operations and prompt payment of benefits, and are unlikely to be spared for further reductions.

The sum of these reductions is to scale back the nation’s commitment to those Americans currently marginalized in the economy. These programs can have a particularly high impact in today’s growing economy, helping employers more willing to take a risk on less experienced and recently trained workers to meet their demands in a tightening labor market.

Read more from The Century Foundation.