Job Retraining Backed but Clinton Plan Has Obstacles : Employment: Some existing agencies resist change. The search for a moderate approach does not please either side.

As President Clinton delivered his State of the Union speech in January, a group of middle-class voters rounded up by his pollsters sat in a rented room in Dayton, Ohio, turning dials attached to a meter to record their approval or disapproval of his words.

Ever since, Clinton has been telling aides and associates that the highest point the approval lines hit was when he talked about a proposal to improve services for the unemployed and help train workers for new jobs.

Actually, aides say, the President is gilding the lily a bit--the true high point on the charts came when he endorsed the anti-crime “three strikes and you’re out” proposal. But re-employment came in a close second--besting health care, welfare reform, education and the rest of Clinton’s panoply of policy proposals.

Not only is there tangible public support for the idea of helping unemployed workers, but also there is, across the political spectrum and in constituent groups ranging from labor unions to business leaders, a fair amount of agreement on what steps to take.

“Fundamental elements of the nation’s unemployment insurance system have changed very little since the program was begun almost 60 years ago, even though . . . the labor market in which it operates has undergone enormous change,” said Janet L. Norwood, former head of the Bureau of Labor Statistics and now head of the government’s Advisory Council on Unemployment Compensation, in recent testimony before a House panel.

Norwood’s advisory committee, made up of representatives of business, labor and state and local government, was unanimous in the belief that the unemployment insurance program “must be adapted to meet the income maintenance and re-employment needs of long-term unemployed workers more effectively,” she said.

So when Clinton and Labor Secretary Robert B. Reich unveiled the Administration’s re-employment proposal on March 9, one might have expected widespread cheers. Instead, even as Clinton spoke, Administration officials were canvassing interest-group representatives in the hopes of identifying changes that might attract additional support to their plan. And despite hopeful predictions by Reich that the Administration’s bill could become law “this spring,” many congressional aides and representatives of competing interest groups predict that the proposal will be lucky to emerge this year at all.

The problems facing the re-employment initiative are “a case study in the movement from high concept to legislative detail,” said a White House official who has monitored the issue. It is a process that, in miniature, reflects many of the problems that have bedeviled Clinton and his aides on larger issues, such as health care and welfare reform.

“It’s very difficult to wipe the slate clean, whatever you’re embarking on,” Reich said in an interview. “There are good reasons and bad for that. The good reason is that institutions are there, and you want to use them. The bad reasons are there are also interests there that have gotten used to what they have.”

The Administration’s plan would consolidate existing federal training programs, with their complicated eligibility formulas and disparate levels of help, into a single program open to all dislocated workers. The plan would transform unemployment offices into “re-employment” centers--operations designed not simply to provide money to tide workers through hard times, but to actively help them seek new jobs.

The proposal would cost about $13 billion over the next five years--largely spent on grants to states to expand their services for the unemployed. The Administration would pay for the plan primarily by shutting down six existing federal worker-training programs and trimming other federal domestic spending.

But for all the agreement that the current unemployment system has failed, badly, the institutions that have grown used to it have proven notably resistant to change. Moreover, the Administration’s approach--trying to find a “moderate” pathway that would avoid the ideological paths of liberal Democrats and conservative Republicans--has on this, as on other issues, left Clinton’s aides in a no-man’s land between camps, shot at by both sides.

Trying to prevent their plans from adding to the budget deficit, Clinton and Reich have had to limit their benefit proposals to levels that fail to excite much support from potential allies, such as labor unions and liberal groups. With no extra money in the budget, the Administration has been unable to do what government typically has done--placate existing interest groups by adding new programs without eliminating old ones.

At the same time, because the proposals would expand benefits, they have excited the suspicions of conservatives and business leaders who worry that Clinton’s small-scale program will turn out to be an initial wedge for something larger and much more costly.

Finally, in trying to change existing programs, the Administration has offended those--from bureaucrats to labor unions--who benefit directly from existing systems.

The opposition from entrenched interests does not necessarily mean that Clinton’s proposals will fail. As with health care reform--another seriously troubled Administration initiative--members of Congress have a powerful incentive to approve something along the lines of what the Administration wants, even if not the exact proposal.

“Every member of Congress, Republican or Democrat, I talk to gives me horror stories about constituents who have lost jobs and say there is nothing out there to help them,” Reich said. “That’s why the system is going to change.

“The hope with all of this is that everybody likes it enough that they’ll get on board. We hope the groups will determine on the basis of their own interests that it’s a mistake to make the best the enemy of the better.”

But that sort of appeal to compromise is exactly the reverse of the logic that animates most Washington-based interest groups.

On the re-employment bill, for example, Administration officials had hoped that labor unions would be key allies. After all, they argued, the bill would expand services to many jobless workers--by the end of the decade roughly doubling the number of unemployed people receiving federally assisted job training.

But because of the tight federal budget, the Administration cannot afford to launch its new program without closing existing ones. And so far, organized labor has been reluctant to part with the existing programs, particularly the Trade Adjustment Act, which labor won in 1962 in exchange for its support of free-trade legislation.

The trade law provides benefits for workers who lose their jobs because of imports, and “we believe it should continue with a separate identity because it is part of a commitment” made years ago, AFL-CIO official Mark Roberts said.

Unions would also like to use the Administration’s proposal as a vehicle to strengthen the so-called WARN law, which requires companies to provide notice to workers before closing a plant. The law, passed over President George Bush’s objections in 1992, has several major loopholes that unions and their allies would like to see closed.

The Administration, which supports a tougher law, at one point considered including WARN amendments in its re-employment proposal. The assumption was that workers who received more notice before losing their jobs could make earlier preparations for finding new work, reducing the length of their stay on unemployment. But business groups vowed that any attempt to strengthen the plant closing law would cause them to oppose the re-employment bill, so the Administration backed down.

Business leaders remain cool to the Administration’s plan, worried that the proposal to expand worker training funds would become an open-ended, and expensive, new entitlement.

Reich met recently with 50 corporate executives seeking to calm their fears and attract support, but business lobbyists have yet to sign on.

Another set of attacks comes from the competing representatives of state and local governments.

Since its birth as part of the New Deal, the nation’s unemployment system has been a joint state-federal effort. The federal government provides the overall structure and some of the funds; the state governments actually run the programs and supply the balance of the money.

The element of the Administration’s new plan that would convert existing unemployment offices into re-employment centers would provide a range of services to workers with the primary emphasis on those facing long-term unemployment. States would be required to screen unemployed workers when they apply for benefits and focus attention on those at risk of long-term unemployment.

The federal government would help pay for the new services. But in exchange, the states would have to introduce an element of competition--allowing private enterprises, such as community colleges and nonprofit groups, to compete with existing state employment services for some of the business and federal grants. A new system of performance standards and reports would give information to unemployed workers about which programs actually succeed in helping people find jobs.

Not surprisingly, the people who run existing state employment services look askance at the idea of competition, fearing that they will be squeezed out. And the government worker unions who represent employment service workers are similarly cool to the idea.

Finally, local government representatives argue that because labor markets are regional--not statewide--they should have greater control of where the money goes. The nation’s governors argue that control should remain at the state level. The Administration, trying once again to steer a compromise, has made both sides unhappy.

A White House official described the difficulties in language that could apply to any number of troubled Administration initiatives: “One of the problems is that it’s not easy to bring order into a field that has grown in an unplanned and incremental fashion over the decades,” he said.

“There are dozens and dozens of programs that have to be brought into reasonable relationship with one another,” he said. “Superimposed on that, you have federal-state relations.” In addition, “the entire basis of the system has to be shifted. It has to be rethought.”

“When you pile those three layers of complexity together and then on top put the financing in a tough fiscal environment, you have a recipe for a complex policy process,” he said with a sigh. “It’s not easy.”