A Publication of WTVP

In his recent State of the Union speech, President Bush outlined a re-employment stimulus plan, the Back to Work Incentive Act, which included specific assistance in the form of Personal Re-employment Accounts (PRAs) to help eligible unemployed Americans who are trying to find work. Let’s take a quick look at this innovative approach.

The Act proposes to give states $3.6 billion to promote PRAs to at least 1.2 million Americans who need the most help getting back to work (individuals likely to exhaust unemployment benefits before becoming re-employed). These funds will enable the states to offer accounts of up to $3,000 each to these individuals so they may purchase job training and key services, such as child care, transportation, employment counseling, case management, etc, and to help them look for a job and get back to work quickly.

The accounts will be administered through the One Stop Career Center system, where the unemployed already seek assistance in obtaining employment, within broad limits to prevent abuse. This will allow the centers to provide an important new benefit to unemployed workers, in addition to the array of employment services they already make available.

States will be given considerable flexibility in designing the account program, using factors such as prior employment in a declining industry, education level, and length of recent job tenure. In addition, states will have the option to allow eligible individuals who have exhausted all unemployment benefits to use account funds as income support, similar to unemployment benefits, until they become re-employed. Finally, states will also have the option of choosing additional targeting criteria.

Built into the Act is an incentive to the unemployed; if an account holder becomes reemployed within a specified 13-week period, he or she will be able to keep the remaining balance of the account as a re-employment bonus. Because account recipients can keep the balance of their accounts when they become re-employed quickly, they’re more likely to get off unemployment benefits and back to work faster. Therefore, the quicker a job is obtained, the larger the re-employment bonus will be. In addition, to encourage workers to stay on the job longer, 40 percent of the remaining bonus will be paid after six months of job retention.

So what are the benefits of the Act? PRAs are a new approach to giving the unemployed more flexibility, choice, and control over their access to training and services and help them mount an aggressive and effective employment search. The Act also makes it easier for individuals to afford to make the transition to a new industry if desired or necessary. Finally, some of the stress and financial burden of an employment search is reduced.

Conversely, both the government and businesses benefit when a job is attained quickly by an account holder because of the shortened period unemployment benefits are paid out. In addition, with the accelerated re-employment and increase in job retention, both the economy and American families are strengthened also.

In the end, if the program works as it should, the economy, the government, and the unemployed should all experience a win-win-win scenario. All we need now are the jobs. IBI