The Labor Department abruptly canceled apprenticeship contracts with labor and business groups this week, before reversing course after the move prompted an outcry from a powerful construction union federation with a constituency of affiliate members who support President Trump.
“To the extent that we had a working relationship with this administration, this program was a key underpinning of that,” said Mike Monroe, chief of staff at North America’s Building Trades Unions, a conglomerate of 14 construction unions. NABTU is one of about 10 contractors who were puzzled and frustrated after receiving notice from the Labor Department this week that their contracts to expand apprenticeship training opportunities will discontinue next month.
Acting Labor Secretary Patrick Pizzella, who was not involved in the cancellation decisions, made the call to walk them back Aug. 15, DOL spokeswoman Megan Sweeney said in a prepared statement following an initial Bloomberg Law report. The public about face came less than two hours after Monroe, a top building trades official, aired his frustration about the Trump administration and the acting labor chief.
Monroe didn’t immediately respond to an email seeking his response to the department’s change of heart.
The DOL has determined that it’s “in the best interest of the Government not to exercise the” contract, the agency wrote to NABTU and other contractors Aug. 14, according to copies of the identical letters obtained by Bloomberg Law. The contract “will end on Sept. 20, 2019. Thanks for your continued support for the Department of Labor,” the one-paragraph letter concluded.
The contractors, which include the AFL-CIO, the National Restaurant Association Educational Foundation, and FASTPORT—supporting military veteran job training—offer apprenticeship training programs, some funded by Labor Department grants. All were meeting or exceeding their performance goals, said Monroe and Eric Seleznow, a former Obama DOL official. Seleznow is now a senior adviser at Jobs for the Future, another contractor that was canceled.
It’s not clear whether John Pallasch, the Trump-nominated head of the Employment and Training Administration who joined the DOL in July, was involved in the cancellation decision. Department sources told Bloomberg Law that ETA political leadership signed off on the move to cancel the contracts. At the very least, Pallasch should have been briefed, the sources said.
“This action was brought to the Acting Secretary’s attention on August 15th and today he has decided to rescind the notifications and will renew the option of these contractors,” Sweeney said in the emailed statement. “Contractors are in the process of being notified. ETA will be reviewing whether policies and procedures for contract renewal or notification were appropriately followed and, if necessary, corrective action will be taken.”
The Building Trades Unions’ Monroe took aim at Pizzella before learning of the reversal.
“It appears to us a political decision has been made by the new regime at the Department of Labor,” said NABTU’s Monroe. “Maybe they found a better way to put these people on a path to the middle class; we’re not aware of one in the construction industry.”
He clarified that the new regime he’s upset with refers to Pizzella, who took over in July after NABTU ally Alexander Acosta resigned. Pizzella’s background as a firm supporter of management in efforts to curb unionization has had other worker groups concerned that the more moderate approach to labor relations under Acosta is in for an overhaul.
“The Acting Secretary values all of the relationships with the Department of Labor’s apprenticeship partners,” the DOL’s Sweeney added. “The Department of Labor is committed to adding more apprentices to join the more than 576,000 apprentices that have started since January 2017. The Department is currently in the midst of rulemaking as the public adds their comments to the goal of apprenticeship expansion to create more prosperous careers for America’s workforce.”
Still Supporting Trump?
NABTU’s political operation, representing millions of American blue-collar workers, looms large over Trump’s 2020 reelection bid. While NABTU officially endorsed Hillary Clinton for president in 2016, its member unions represent a sizeable share of workers in swing states who voted for Trump in 2016.
The building trades’ chief expressed his frustration at a moment when his organization’s alignment with the Trump administration is already imperiled by a separate apprenticeship initiative. The DOL recently proposed a rule to establish a new model of “industry-recognized apprenticeship,” which would supplement the traditional DOL registered apprenticeship process that construction unions see as integral to their ability to create well-paying union jobs and grow membership. The new system would remove government red tape by transferring oversight to businesses, potentially to include those who are running the apprenticeship program themselves.
Acosta fought to carve out the construction industry from the new model. The new DOL leadership has various trade unions now becoming more vocal in their anxiety that the final rule will open a pathway for nonunion building companies to hire cheaper labor that undermines the registered apprenticeship model.
The department didn’t respond to a question about whether the original decision not to renew the contracts was motivated by a pivot to the industry-recognized apprenticeship model.
Intermediaries Seen as Crucial
The news that they would not be renewed for a fourth year startled the apprenticeship intermediary contractors, said Seleznow, who earlier this week spoke with six other contractors from industry, labor, and other organizations. Since 2016, they have all received three rounds of funding each year at about $1 million per year to promote awareness and lend technical assistance to apprenticeship program operators in specific industries as well as for veterans.
“The sudden cancellation of these apprenticeship contracts will force us, and the other contractors, to stop work in the middle of working with hundreds of employers nationwide, leaving them with no technical support to advance apprenticeships,” said Seleznow. “DOL is forcing us to walk away from some major industry partners in advanced manufacturing, hospitality, healthcare, IT with no support to help them develop high quality training programs.”
“I do not know the reason for reversal, but it was the right thing to do for businesses, labor and workers,” Seleznow said after learning his contract is now renewed.
A source familiar with the process said that the department’s leadership initially wanted to open up a new competition for groups to bid on intermediary contracts, rather than renew the existing contracts for the fourth year of their five-year option. That would’ve still leave the agency with a gap period without any intermediaries to work with employers in healthcare, manufacturing, IT, and other fields to bolster their apprenticeship opportunities.
The mission to expand apprenticeship into new industries has been a major piece of the Trump administration’s overall employment policy agenda and is a core element of the president’s daughter and senior adviser Ivanka Trump’s portfolio.
Veterans Group Disappointed
The canceled contracts also agitated an organization that works to support the veteran community, another group that Trump has paid lip service to in the past.
“Given the President’s commitment to bridging the skills gap through innovative apprenticeship and Veteran’s programs, we are surprised and disappointed by the DOL’s decision to cancel the very successful and cost effective apprenticeship Intermediary program,” said Dave Harrison, executive director of apprenticeship at FASTPORT, via email.
Harrison estimates that up to 27,000 veterans could have benefited from FASTPORT intermediary services over the next five years, if the contract is allowed to continue.
Other contractors who received the termination letters include the National Urban League, the Service Employees International Union-affiliated Healthcare Career Advancement Program, Washington Technology Industry Association, and American Hotel and Lodging Educational Foundation.
The DOL also called off a recurring conference call that was scheduled for the contractors yesterday, citing a need to ensure appropriate leadership is available for the call, Seleznow said.
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