A. Closing the Jobs Gap

The Administration is committed to supporting the efforts of cities to promote jobs and economic opportunity. The Federal Government currently spends over $10 billion per year, and offers another $1.7 billion in support of local community revitalization strategies. These strategies include:

Over the past 5 years, the Administration's efforts to help cities improve the economic climate for attracting business investment and creating jobs have begun to pay off. The first round of Empowerment Zones (EZs) and Enterprise Communities (ECs) has attracted billions of dollars in private-sector capital commitments, and is proving to be a success in building private-sector, community, and government partnerships. Two rounds of funding for Community Development Financial Institutions have begun to strengthen community-based financial institutions that specifically focus on the needs of their local communities. HUD's Section 108 Economic Development Loan Fund is an important tool for cities to support business expansion or startups. The program has enabled cities to partner with companies in making business investments in distressed communities, using Federal loan guarantees. Over the past 5 years, HUD has committed $3 billion in federally guaranteed loans to such ventures as the Cessna Aircraft Work and Learning Center in Wichita, Kansas, with zero defaults by participating communities.

The President's FY 1999 budget includes the following initiatives that will help communities create jobs where they are needed most -- close to where people live.

Enact a $400 million Community Empowerment Fund to help create or retain jobs in distressed communities. The FY 1999 budget includes a proposal for $400 million to support the Community Empowerment Fund. This initiative will enhance and expand the existing Section 108 Economic Development Loan Fund and Economic Development Initiative (EDI) grant program. HUD estimates that this request will enable communities to leverage at least $2 billion in private investment for business startup or expansion loans, financing for industrial facilities, neighborhood-based commercial revitalization efforts, and other economic development activities. These projects may support as many as 280,000 jobs when fully implemented.

Build on the success of Empowerment Zones (EZ) and Enterprise Communities (EC) -- expand to 15 new Zones. Since 1994, when the first 6 urban Empowerment Zones, 2 Supplemental Empowerment Zones, and 60 Enterprise Communities were designated, EZs and ECs have generated commitments of billions of dollars in public and private investment. A recent report by Standard & Poor's DRI concluded that urban EZs have led to significant improvements in the bond ratings of those cities.³⁵ The Community Empowerment Board, led by Vice President Gore, oversees the Administration's community empowerment efforts and is committed to building upon this initial success. Later this year, contingent upon Congressional action, HUD will make similar resources available to more cities when it designates 15 additional urban EZs. In addition to the tax incentives that are already in place, the Administration has requested $1.5 billion over 10 years in Title XX grants to support these new initiatives.

Increase support for Community Development Financial Institutions(CDFIs). The Administration's FY 1999 budget calls for increasing the appropriation for the CDFI Fund to $125 million. The President is also seeking to reauthorize the Fund this year. CDFIs expand the availability of credit, investment capital, and financial services in underserved urban and rural communities. CDFIs include many types of financial institutions, such as community development banks, low-income credit unions, community development loan and venture capital funds, and microenterprise loan funds. They provide their customers with a full range of products and services not available through the conventional commercial banking sector -- from basic financial services to small business loans and from home mortgages for first-time homebuyers to rental housing rehabilitation loans for local nonprofit groups.

Continue successful economic development and business lending programs. The President's budget includes a streamlined and enhanced Community Development Block Grant (CDBG) program, one of the first tools cities have turned to when trying to revive low-income neighborhoods and an important resource for job creation and business development. HUD's FY 1999 proposal of $4.7 billion includes a significant reduction in set-asides that have in the past reduced the program's effectiveness. The proposed changes will result in a $281 million increase in formula grants for cities and States. Approximately 10 percent of the CDBG funds ($480 million in FY 1999) are used for assistance to businesses and other economic development initiatives.

The Economic Development Administration (EDA) has provided initial capital for over 480 local revolving loan funds that funnel capital to such enterprises.³⁶ These locally administered funds have made more than 7,200 loans to new and existing businesses. EDA also aids community economic development by investing in the infrastructure needed to attract and support private businesses. In FY 1999, EDA-funded projects will create or retain some 30,000 jobs for economically-distressed communities.

The largest single Federal catalyst for small business capital is the U.S. Small Business Administration (SBA), which guaranteed over $10.8 billion in long-term, low-interest, private loans to small firms in 1997. Most of these loans were guaranteed through SBA's Section 7(a) program. SBA expects to assist 52,500 businesses through Section 7(a) and Section 504 loan guarantees in 1998, and another 56,400 in 1999. These loans finance small business start-up and expansion and may be used for virtually every business purpose from acquisition of real estate or equipment to export transaction financing to working capital. SBA also helps to empower some of America's smallest businesses by providing financing for microloans in amounts up to $25,000. SBA's loans are made to non-profit intermediaries that, in turn, re-lend to small businesses. SBA's technical assistance programs provide information, education, and training to help small businesses start, run, and grow. Finally, while all of SBA's programs provide assistance to entrepreneurs in cities, the One Stop Capital Shops (OSCSs), as SBA's contribution to the EZ/EC, are crucial to the delivery of SBA programs in America's cities.

The Federal Government offers a wide range of programs that help communities connect their residents to training and employment opportunities within the regional job market.

Oakland Wins Competitive Welfare-to-Work Grant

The EASTBAY Works Regional One-Stop Center in Oakland, California, a project of the Oakland Private Industry Council, is a partnership designed to coordinate employment activities throughout the Bay Area counties of Alameda and Contra Costa. Like other winners in the U.S. Department of Labor's (DOL) Welfare-to-Work competitive grant program, EASTBAY services will be targeted to hard-to-employ welfare recipients, emphasizing long-term independence.

On May 27th, President Clinton announced 49 winners of the DOL competitive grants in 34 States -- approximately 3/4 of which operate in urban areas with concentrations of poverty and all of which depend on intensive collaboration at the community level. The grants are part of a $3 billion national effort to reduce dependency among welfare recipients who face the most difficult barriers to employment.

Welfare-to-Work Grants. The President fought for $3 billion in targeted grants for welfare to work in the Balanced Budget Act. Three-fourths of the $3 billion appropriated for 1998 and 1999 will be allocated to States as formula grants of which the majority will be placed, through the Private Industry Councils, in the hands of the localities who are on the front lines of the welfare reform effort. The remaining 25 percent will be awarded competitively to local entities. With these funds, local governments, private industry councils, and other community-based organizations are able to design and implement employment strategies for long term and "hard to place" welfare recipients. These include job creation, job placement, and job retention, including wage subsidies to employers, community service work, on-the-job training programs, and other critical post-employment supportive services.

Welfare-to-Work Housing Vouchers. The President's FY 1999 budget proposes $283 million for 50,000 welfare-to-work housing vouchers -- one-half of the overall request for 100,000 new vouchers requested by HUD to help low- and moderate-income families keep pace with rising housing costs. These will provide Section 8 tenant-based rental assistance to enable families leaving welfare to obtain affordable housing near a new job, and thereby get or keep a job. It would eliminate difficult and sometimes relatively costly multi-hour commutes that are often unreliable, and pose another hurdle to obtaining and retaining employment. This proposal goes beyond solving the transportation problem. It allows recipients to choose neighborhoods, both in the city and beyond, that offer the amenities and opportunities that are necessary for them to move from welfare to work.

Welfare-to-Work Tax Credits. To give employers an additional incentive to hire those entering the workforce, the welfare-to-work tax credit enacted in the 1997 Balanced Budget Act allows employers to take a credit of as much as $3,500 per year for each long-term welfare recipient they employ, and an additional $5,000 for the second year they stay on the job. This credit complements the Work Opportunity Tax Credit of up to $2,400 for the first year of wages for certain job seekers. The FY 1999 budget extends these two important credits for an additional year.

Access to Jobs. In 1996 HUD began testing approaches to helping low-income families through its five-city Bridges to Work demonstration, which links inner-city job seekers with job placement, transportation, child care, and other supportive services that increase the likelihood that they will be able to find, obtain, and keep jobs. The Administration will expand this strategy in FY 1999 through the Access to Jobs initiative which was included in the TEA 21 transportation reauthorization bill the President signed on June 9, 1998. This competitive grant program, authorized at $150 million annually beginning in FY 1999, will help communities develop flexible transportation services to connect low-income workers and those moving from welfare to work to area jobs at critical job-related services.

In 27 million families, both parents -- or the only parent in the family -- work.³⁷ Many of them who want safe, quality child care cannot find it or afford it. This is particularly true for low- and moderate-income working families, and for those on welfare who are trying to join their ranks.

President Clinton has proposed investing more than $20 billion over 5 years in an historic new initiative to improve the availability, affordability, and quality of child care in America's cities and throughout the country. His Child Care Initiative starts by expanding existing assistance vehicles such as the Child and Dependent Care Tax Credit, which already helps about 6 million families cover child care costs each year. The budget proposes liberalizing this credit so that it aids an additional 3 million families with incomes below $59,000.

To make child care services more widely available, the budget proposes a new tax credit for private employers that expand or operate child care facilities, train child care workers, contract with a child care facility to provide child care services to employees, or provide child care resource and referral services to employees.

The President's Child Care Initiative also calls for dramatically increasing funding for Child Care and Development Block Grants, the mainstay of Federal assistance for low-income working families and those moving from welfare to work. A recent survey by the U.S. Conference of Mayors indicates that many States are trying to help more families, but provide subsidies at levels too shallow to cover the cost of child care in urban markets.³⁸ President Clinton has asked Congress to increase funding for these subsidies by $1.2 billion next year.

The President's initiative also includes several measures intended to improve the safety and quality of child care. In addition to providing additional funds for the local enforcement of health and safety standards in child care settings, the budget proposes $50 million in FY 1999 for a new Child Care Provider Scholarship Fund, which, with State and local matching funds, will support training for up to 250,000 child care providers, as well as boosting their pay. It will also reduce rapid turnover in the industry by requiring that those who receive training stay in the field for at least a year.

The Administration is committed to helping residents adapt to economic change through investments in a wide range of workforce development programs and services that help people gain the skills needed to find stable, well-paying jobs. These include:

Sante Fe Collaboration Develops High-Tech Training Capacity

Santa Fe is preparing its workforce for jobs in the booming high technology field at New Mexico Northern Community College's 4,000-square-foot High Technology Manufacturing Training Facility, developed with funding assistance from Intel Corporation and the U.S. Departments of Commerce, Energy, and HUD. The facility, designed to train its mostly adult students for employment in the region's emerging semiconductor and high-technology industries, features a clean room, robotics laboratory, semiconductor manufacturing facility, and telecommunications classroom -- which also will help the school provide distance learning opportunities to rural communities.

Eighty-five students are currently enrolled in the community college's micro-electronics program, which is based in the new facility. Its first graduates have already been placed in jobs at Intel and Los Alamos National Laboratories. The program expects to place students in jobs at salaries averaging $35,000 per year.

The President has proposed a G.I. Bill for America's Workers to consolidate and streamline activities in the Job Training Partnership Act and empower adults to make better choices for job training services.

Adult Training Grants, administered by the U.S. Department of Labor, would allocate $1 billion in FY 1999 to local communities. Through employer-led Private Industry Councils, the communities direct targeted job training, placement assistance, and support services to serve over 400,000 low-income individuals, including many welfare recipients. About 60 percent of those receiving services have a job within 3 months of leaving the program.

In addition, President Clinton has overseen a dramatic increase in job training funds to help workers displaced by plant closings or mass layoffs through early intervention programs, new skills training, job search assistance and other support services. The FY 1999 budget requests $1.5 billion for dislocated worker assistance -- nearly three times the amount available 5 years ago. The services provided by these funds will help about 685,000 displaced workers find good jobs. More than three-fourths of workers assisted will be working within 3 months of leaving the program, earning an average of 97 percent of the wage they received in their previous jobs.

The President's FY 1999 budget includes several initiatives aimed at training and placing youth in jobs. These include: