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Bank Withdrawal The Closure of America's Job Bank

July 6, 2007
Related Topics: Candidate Sourcing, Ethics, Workforce Planning, Featured Article
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America’s Job Bank—the country’s first national job site on the Internet and one of the biggest—closed at the beginning of July.

And it’s not entirely clear why.

Businesses liked the free government job Web site. So did states. It served a wide range of workers, with many listings for lower-paid jobs. During its heyday around 2000, research found the site to be a cost-effective, appropriate government service. Even after several years of a "starvation diet" in funding, according to a former Labor Department official, America’s Job Bank continued to win praise—including a 2007 honor from respected recruitment consulting firm Weddle’s.

So why did the Bush administration choose to close America’s Job Bank?

In a set of short memos announcing the decision in March 2006, the U.S. Department of Labor attributed the move in part to outdated technology at the site and claimed that "AJB duplicates what is already available in the private sector." The Labor Department also said that during the past two years, its Employment and Training Administration had "extensively reviewed and evaluated the ongoing viability of maintaining a national job site."

In responses to questions from Workforce Management, the Labor Department expanded on the rationale put forth in the memos. But it has declined to make public any comprehensive study weighing the pros and cons of America’s Job Bank and justifying the decision to close it.

At the same time, a good deal of evidence argued for the site’s continued existence. This includes a 2002 Labor Department report finding that 35 percent of employers who were tracked in a three-month study hired at least one person through America’s Job Bank. The report estimated that close to 345,000 job seekers were placed directly via the site in one year.

In addition, there are questions about how seriously the Labor Department valued the views of those with a stake in America’s Job Bank. Participants at three feedback sessions sponsored by the department in 2003 gave America’s Job Bank a solid endorsement, according to a report summarizing the seminars.

One former Labor Department official who managed America’s Job Bank says the site did not get a careful, fair assessment.

David Morman, former director of research and development in the Employment and Training Administration’s Office of Technology and Information Systems, says the actions of the political leadership at the Employment and Training Administration demonstrated it was determined to shutter the site back in early 2004. He says Emily DeRocco, assistant secretary for employment and training, and her deputy, Mason Bishop, decided by early 2004 to put the site on "maintenance only," which in effect weakened it and allowed the leaders to be able to claim later that it was not worth saving.

Morman, one of the original architects of America’s Job Bank, retired from the Labor Department in April 2004, in part to protest the treatment of the site.

"The tea leaves were in the cup," says Morman, a 23-year veteran of the Labor Department. "They were going to do away with AJB."

Another former Department of Labor official called America’s Job Bank one of the most cost-effective government programs he knew of. The official, a former senior-level employee who spoke on condition of anonymity for fear of harming his current employer’s business prospects, said that under previous administrations, there would have been a study to justify killing a program as significant as America’s Job Bank. He suspects such a study never was completed, given the department’s relative silence on the matter.

He also said it wouldn’t surprise him if the Employment and Training Administration’s political leadership disregarded evidence backing the site in order to pursue the Bush administration’s privatization agenda.

"It’s absolutely in the realm of possibility," he says.

The Labor Department declined requests for responses to the claims made by Morman and the former senior-level Labor Department official. In mid-June, a Labor Department spokeswoman informed Workforce Management that the agency would no longer answer the publication’s questions about the closing of America’s Job Bank, saying it had responded to numerous Workforce Management queries on the subject over the past year.

Closure decried
   The decision to close America’s Job Bank has been controversial from the outset.

There is widespread concern that the end of America’s Job Bank will cause problems for employers, job seekers and states. Although the Labor Department says it has helped states and other groups prepare for its closure and two would-be replacement services have emerged in the private sector, the transition has been far from painless.

The Labor Department has also come under fire from executives at NaviSite, a private-sector firm that helped run America’s Job Bank as a contractor, for not giving away or selling off the assets of the site. Auctioning off the site conceivably could have allowed it to continue its role while giving taxpayers a return on their investment.

And there’s a question whether the decision to kill the site violates the letter or spirit of a law dating to the New Deal era. The Wagner-Peyser Act established a nationwide system of employment offices, and related federal code calls on the labor secretary to maintain a system for connecting job seekers and employers across state lines. The Bush administration argues that task has been rendered moot by the Internet. But state officials have suggested otherwise, and pushed to continue swapping jobs posted in their employment services systems.

America’s Job Bank played a major role in such interstate job data sharing. Thirty-nine states submitted jobs to the site. Thirty-three states were signed up to receive job listings from America’s Job Bank.

Developed in 1995, the site is credited with playing a pioneering role in the history of online recruiting. It earned accolades in recent years as well. Among these is a Weddle’s 2007 User’s Choice Award. These awards "recognize the Web sites that provide the best level of service and value to their visitors." In 2007, a total of 30 employment sites earned one of the awards, which are based on ballots cast by recruiters and job seekers. Other 2007 winners included Monster, CareerBuilder and Yahoo HotJobs.

Job boards overall account for 12.3 percent of all hires, according to research from recruiting consulting firm CareerXroads. The Big Three commercial job boards—Monster, CareerBuilder and Yahoo HotJobs—make up about half of the job-board hires, CareerXroads’ annual source-of-hire study has found. Some 40 percent of companies cited America’s Job Bank as among the niche or other general job boards they use, says Gerry Crispin, co-founder of CareerXroads.

Recently, traffic at America’s Job Bank trailed major commercial job boards by a wide margin, according to Web information company Alexa. For the first five months of 2006, America’s Job Bank averaged 1.9 million unique visitors per month. CareerBuilder, by comparison, boasts of more than 21 million unique visitors to its site every month.

Even if America’s Job Bank wasn’t among the leaders in hiring volume or traffic, it stood out for its scale. The site held approximately 2.2 million jobs, along with more than 600,000 résumés. By contrast, CareerBuilder claims to have more than 1.5 million jobs. There were about 450,000 registered employers at America’s Job Bank.

But the massive site is now shuttered. In one of its memos last year about the decision to shut America’s Job Bank, the Labor Department said the site’s benefits no longer outweighed the costs of operating and maintaining the system. It noted the proliferation of private-sector job boards since the site’s launch, and said "trends in the industry seem to indicate that some level of free service will also be available to businesses/employers in the future." In addition, it said "state and local areas that used to depend on AJB for their Internet self-service labor exchange presence have built and operate job banks of their own that are not based on AJB."

The Department also cited the costs of America’s Job Bank: "The cost of operating AJB has been as high as $27 million per year, with a current operating budget for maintenance-only of $12 million per year."

In a companion memo, the Department predicted a "negligible" impact on workers and businesses.

The Labor Department’s decision has found support among workforce and recruiting experts. And in May, the department elaborated on some of its arguments in written responses to questions posed by Workforce Management. It said, for example, that it has questioned states about the site. "Over a number of years, DOL consulted with states regarding their strategies for using Internet technology to serve customers," the department said in a statement to Workforce Management. "Consistently DOL was told that states preferred their own technologies, and this is evidenced by the fact that more than 40 states once relied on the AJB architecture for their electronic job postings and at the time of the closure announcement, fewer than 12 were still reliant."

Asked to expand on its claim that the job site was outdated technologically, the Labor Department cited a less-than-intuitive user experience. "Private sector job boards use advanced navigation tools that make their sites more user-friendly and intuitive—similar to the way that Amazon.com helps users identify products that are similar to ones they have purchased by developing a profile of users based on their experience on the site," the Labor Department said in a statement.

The department also claimed the site was relying on outmoded computer equipment. "Hardware is in need of replacement due to the fact that manufacturers are no longer supporting many older items," it said.

Rationale questioned
   The notion that technology behind America’s Job Bank was rickety is disputed by Denis Martin, executive vice president of NaviSite, which managed the technology behind America’s Job Bank for more than a decade.

"The system was and is solid," he said before the site’s closure.

Backers of the site admit it had its flaws. But they say the problems largely stemmed from years without significant improvements. The site had been put on a maintenance-only budget by early 2004, according to a budget document obtained through the Freedom of Information Act.

Morman says that in 2003, it became difficult to persuade the political leadership of the Employment and Training Administration to approve any upgrades to the site.

"They put it on a starvation diet," he says. "In the Internet world, six months is the half-life of a site."

In addition, there’s some evidence the Labor Department didn’t place much importance on the opinions of states and others affected by America’s Job Bank. The feedback forums of 2003 included state officials, business leaders and community college officials. And earlier this decade, a group described by the Labor Department as the "governing body" for a set of services including America’s Job Bank stopped meeting. Morman blames the demise of the group, which was called the National Electronic Tools Board and was made up of federal, state and private nonprofit members, on Labor Department leaders.

Other aspects of the Labor Department’s decision have been challenged. A Minnesota study last year found that just 37 percent of America’s Job Bank users in that state said the site’s phase-out would have a "negligible" impact on them, while 16 percent said it would have a "great impact." Critics argue that job seekers will suffer, especially low-wage workers, given that the site has many postings for lower-skilled jobs and employers may not be as willing to pay to list such openings. A recent search for "dishwasher" work, for example, returned 171 listings on Monster and 2,177 listings on America’s Job Bank.

Business leaders, too, questioned the phase-out of the site.

There’s concern that small firms could be hit hard by job posting fees, while federal contractors were able to use America’s Job Bank to satisfy a job-listing requirement related to veterans. In addition, state officials have raised concerns about the site’s shutdown. Earlier this year, the National Association of State Workforce Agencies—a group of state administrators of workforce programs and services—sent letters to Congress asking it to set aside $6 million to keep the site alive for another year. That plea so far has been in vain.

Adding to the evidence that America’s Job Bank a unique role is the fact that the two services seen as most closely standing in for it did not exist at the time the Labor Department said it would shutter the site. These are JobCentral National Labor Exchange from nonprofit group the DirectEmployers Association and America’s Job Exchange from NaviSite.

America’s Job Bank also won an endorsement as a legitimate government service by a group of researchers that included Joseph Stiglitz, who was then a Stanford University professor and who won the Nobel Prize in economics in 2001. The study, published in 2000 and titled "The Role of Government in a Digital Age," found that "America’s Job Bank seems consistent with the principles for government action."

The Labor Department did not respond to Workforce Management’s requests to produce any report that justified the shutdown of America’s Job Bank. Nor would it comment on the Stiglitz study or the demise of the National Electronic Tools Board. But in a statement, it contested the significance of the Minnesota study, given its "relatively small sample (229 respondents) of Minnesota employers only." The department also argued there’s a dearth of data proving America’s Job Bank to be efficient and effective.

"There is no evidence that AJB created an economic efficiency and quickly matched employers and job seekers," the Labor Department stated. "The private sector provides this service more efficiently, more effectively and in a more customer friendly manner."

Conflicting report
   But some of those claims are countered by the Labor Department’s own research.

A 2002 report titled "America’s Job Bank: Outcome Study" indicated the site was fairly effective and quite efficient. The study, conducted for the Labor Department by research firm Technical Assistance & Training Corp., followed about 250 employers and a similar number of job seekers using the site over a three-month period.

It also involved telephone interviews of employers using commercial job sites including Monster and HotJobs (now part of Yahoo). Twenty-five employers were interviewed for each of the commercial sites about site use, success and cost. "Although this small sample and methodology produce results that are of much lower accuracy than the AJB results," the study stated, "they are meant only to provide a rough standard against which to compare AJB, as such information is not available."

The study found that 4 percent of job openings on America’s Job Bank were filled through the site. That rate was significantly lower than the 15 percent rate found at Monster, but not far from the 6 percent rate at HotJobs.

In addition, the study found that 10 percent of the job seekers found jobs directly through America’s Job Bank—which translates to an estimated 344,944 over the course of a year.

Employers were asked to provide satisfaction ratings on various aspects of America’s Job Bank.

"Overall, most of the mean ratings were between neutral and satisfied," the study found.

Job seekers were also asked to provide satisfaction ratings on various aspects of America’s Job Bank. "In general, their ratings were between neutral and satisfied, indicating mildly positive perceptions about AJB features and the site as a whole," the study stated.

The report also found that the cost of filling positions was significantly cheaper at America’s Job Bank than at commercial job boards. Although America’s Job Bank is free to employers, the study considered the cost to the site to fill a job opening. It estimated the cost to America’s Job Bank per opening filled was $44.52. The average estimated cost per placement to the employer was $1,907 at Monster and $644 at HotJobs.

The Labor Department declined to comment on the report. Workforce Management obtained the document from Morman. And the former senior Labor Department official who spoke with Workforce Management under condition of anonymity confirmed the report is authentic. He adds that it was discussed by high-level officials in the Labor Department. "I know Emily got that report," he says, referring to Assistant Labor Secretary Emily DeRocco.

The report’s significance is subject to debate. Asked to review the report, Rich Hobbie, executive director of the National Association of State Workforce Agencies, noted that the method for studying America’s Job Bank was different from that used for commercial job boards. "It’s hard to draw conclusions from it," he says.

But CareerXroads’ Crispin says the report "may be one of the best studies ever conducted examining the results of a job board." He adds that his own annual research on hiring indicated that America’s Job Bank was an "effective value."

Al St. Martin, former deputy commissioner of the Minnesota Department of Economic Security, recalls seeing the Technical Assistance & Training Corp. report when it came out and being impressed by the performance of America’s Job Bank. A longtime critic of the site for not being flexible enough in the way it linked up with state job banks, St. Martin says the report softened his views. The Labor Department should have taken it into account in justifying the shutdown of the site, St. Martin says.

"At the very least, you’d have to say what has changed since the TATC study was released," he says.

Early warning signs
   St. Martin also says the Employment and Training Administration signaled it wanted to cut America’s Job Bank as early as 2002. He says a high-ranking Employment and Training Administration official called him that year to say a program St. Martin was developing through a grant, America’s Learning Exchange, would be axed. The official, whose name St. Martin says he cannot recall, tried to reassure him with a reference to America’s Job Bank, St. Martin says.

"I was told not to feel singled out, because America’s Job Bank was next," he says.

The Labor Department declined to respond to St. Martin’s comments.

St. Martin’s account supports Morman’s claim that Labor Department leaders were determined early on to close the site. Morman admits he was an advocate for America’s Job Bank, but says he always sought to do objective, professional staff work on behalf of the political leadership at the Employment and Training Administration.

He also says he earned a Labor Department award that carries with it a bitter irony. Morman says he was on a team that won an honor for helping Mexico create a public labor exchange Web site.

Although the Labor Department declined to comment on Morman’s job performance, he is respected by former colleagues. Jim Vollman, former associate assistant secretary of labor in the Clinton administration, says he always gave Morman "superior" job ratings.

"He is one of the straightest arrows that I’ve met," Vollman says.

Both Vollman and Morman now are consulting with DirectEmployers on its JobCentral National Labor Exchange service.

Morman is hopeful about the JobCentral service. He says it may someday improve on what America’s Job Bank accomplished. But, he says, the decision to close America’s Job Bank was nonetheless misguided and in blatant disregard of the facts.

"With AJB you had not only a viable but a prominent labor exchange—one that other countries emulated," Morman says.

He adds: "The American taxpayers, I think, were let down."

 

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