The Academic Accomplices: How Georgetown, JFF and New America Launder $3 Billion in Workforce Failure
Chinedu Uzoma Echeruo
I build A.I.-powered GovTech startups in Distressed communities
Breaking Ranks: The Brave Federal Official Who Exposed the $3 Billion Workforce Betrayal
In May 2023, something extraordinary happened in Washington. A former Assistant Secretary of Labor—a man who once ran America's entire workforce development system—sat before Congress and confessed:
Eight out of ten young people who enter taxpayer-funded job training programs emerge with nothing.
John Pallasch wasn't a critic. He wasn't an outsider. He had been the ultimate insider, and he was telling Congress that the very system they were preparing to reauthorize was a catastrophic failure.
His testimony should have triggered headlines, investigations, and immediate reform. Instead, it triggered something else entirely: a masterclass in how Washington protects failed systems that generate billions for the right people.
This is the story of how that protection racket works.
The Players
Over two congressional hearings—House in 2023, Senate in 2024—we watched a carefully choreographed performance:
The Whistleblower: John Pallasch, former Assistant Secretary of Labor, who broke ranks to expose 80% failure rates and states openly planning for poverty
The Academic Sanitizer: Dr. Harry Holzer of Georgetown, who immediately reframed poverty wages as "success" and system failure as mere underfunding
The Think Tank Validators: Taylor White (New America) and David Bradley (Jobs for the Future), who acknowledged crisis while prescribing more of the same poison
What You're About to Discover
This article reveals how $3 billion in annual funding meant to help America's most vulnerable instead funds a vast ecosystem of failure. Through the actual words of congressional witnesses, we'll show you:
What follows are the actual testimonies, in their own words, that reveal how America's poverty industrial complex captures billions while abandoning millions.
The Whistleblower's Confession: Bombshells from Inside the Failed System
1. The Training-to-Job Placement Crisis
"...the WIOA data tells us that only 34.6 percent of WIOA adults who receive WIOA skills development are placed in a job related to that skills development. That percentage drops to 34.2 percent for dislocated workers and drops all the way to 20.8 percent for youth. So one in five youth who receive skills development under WIOA find a job related to that skills development."
The Impact:
2. States Negotiating Failure Into Their Contracts
"I pulled down from the Department's website the 2023 negotiated performance levels for some of the states and if you look at the performance levels... if I look at New York and New Jersey they're second quarter after exit... is 61 percent for New York and 62 percent for New Jersey. So those states are telling us right off the bat 40 percent of the people who exit our program are going to be unemployed for six months."
"New Jersey their negotiated performance level for the adult program under WIOA is fifty four hundred dollars a quarter so that's twenty thousand dollars a year. That's the bar that they want to hold themselves accountable to. We are going to provide skills development to people and we hope they will make twenty thousand dollars a year when they leave our program. That's just not enough."
The Reality:
3. The Absurd Training Provider List
"There are a couple of States out there who have more training programs on their ETPL than people they train. So right there we know we have too many programs."
"The ETPL which contains more than 75,000 WIOA eligible skills development programs across the country with little to no repercussion for poor outcomes."
The Problem:
4. Five Years Without Federal Accountability
"Accountability starts with the sanctions provision in the law. Unfortunately there was no sub regulatory guidance from the Department of Labor on how to administer sanctions until February of 2020 and it just so happened that I signed that sub-regulatory guidance. So for more than five years the law was in place without the Department of Labor weighing in on exactly how the department would hold the states accountable."
"We can see that there wasn't a real commitment to accountability. There wasn't a real commitment to sanctions up front."
The Failure:
Pallasch's Bottom Line
"We can talk about funding levels but putting more money into a system that doesn't have the accountability and doesn't have the performance isn't going to generate the results we want. We first have to clean up the process first."
"Almost never are complex problems resolved by pulling a single lever... we must look across the broader Workforce system and understand how poor leadership, outdated technology, incomplete data and a disjointed patchwork of federal Workforce programs allows too many in the system to do what they have always done, which for decades employers have told us is simply not enough."
The Academic Response: Sanitizing the Confession
Within minutes of Pallasch's devastating testimony, the machinery of academic legitimation kicked into gear. The same hearing that should have triggered investigations instead became a masterclass in how prestigious institutions protect failed systems.
Enter Dr. Harry Holzer—Georgetown professor and former Chief Economist at the U.S. Department of Labor. Here was a man who had spent years inside the very system Pallasch had just exposed, who knew every dollar wasted, every life failed. As the Department's former Chief Economist, he had analyzed these exact programs, signed off on these exact metrics, understood these exact failures.
Now, wearing his Georgetown credentials, Holzer stepped forward not to validate the whistleblower's confession, but to reframe it. What followed revealed how academic prestige transforms systematic failure into scholarly debate:
The Georgetown Gambit: Dr. Holzer's Defense of Poverty Wages as "Success
1. On Measuring Success: Look at Progress, Not Just Wage Levels
"I respectfully disagree with my colleague Mr Pallasch, I read those data completely differently than he does. You can't just look at earnings levels you got to look at the improvements over time that those generated. If a person is starting at a very very low earnings level and get a 10 or 20% bump up I would consider that a successful program."
Holzer's Counter-Argument:
2. On Funding Levels: The Real Problem
"We now spend only about four billion dollars a year on the core programs in titles one and two of WIOA... in a 25 trillion dollar economy and one with 150 million workers that constitutes very very low investment."
Holzer's Perspective:
The Senate's Turn: One Year Later, Same Theater
A year after John Pallasch's explosive House testimony exposed the workforce system's 80% failure rate for Youth, the Senate had its opportunity to confront these revelations. On June 12, 2024, the Senate Committee on Health, Education, Labor and Pensions (HELP) held its own hearing: "The Workforce Innovation and Opportunity Act: Supporting Efforts to Meet the Needs of Youth, Workers, and Employers."
The reauthorization process requires both chambers of Congress to act. The House had heard Pallasch's confession in May 2023. Now it was the Senate's turn. They assembled their own panel of experts for the June 2024 hearing, including:
These witnesses would testify about 4.5 million disconnected youth, the skills gap, and needed reforms. John Pallasch's testimony from the previous year would not be referenced during the hearing.
4.5 Million Abandoned: Taylor White's Crisis Acknowledgment Without Accountability
1. The Death of the American Dream for Young People
"Economic Mobility long considered a Hallmark of American society has been declining for decades with or without a college degree a young adult today is less likely to earn as much as their parents basic necessities like Health Care housing and education that were affordable to previous generations are far more expensive today making the transition into adulthood much harder for young people to navigate"
The Reality:
2. 4.5 Million Young Americans Lost to the Economy
"Currently over 12% of Americans between the ages of 16 and 24 are disconnected from both education and the labor market that's roughly 4.5 million young people"
The Scale:
3. Systemic Inequity in Youth Disconnection
"rates of disconnection are highest among Native American black and Latino youth young men are more likely to be disconnected than young women and these so-called opportunity youth are twice as likely as their connected peers to have grown up in poverty and three times as likely to have a disability"
The Disparities:
4. Federal Response: A Drop in the Ocean
"each year we owe a funded program such as job core youth build and the myriad local prog program supported by supported by Title I youth dollars provide training and services to roughly 200,000 youth a majority of whom are neither working nor in school but the number of Youth served through WIOA is a shockingly small fraction of those who need support"
"by failing to serve this population of Youth in much greater numbers we squander an opportunity to harness the potential of more than 4 million Americans who are at the very beginning of their working lives this is unacceptable"
The Failure:
White's Bottom Line
"the most important recommendation I can offer today to this committee is a simple one we must substantially increase the federal investment in youth programming through WIOA to a level that is commensurate with the scale of the barriers young people are facing"
The Consequences She Warned About:
"a robust body of research demonstrates that youth disconnection is associated with lower levels of educational attainment and increased rates of substance abuse physical and mental illness and criminal activity the individual and social costs of Youth disconnection are enormous"
The JFF Playbook: Selling the Dream, Hiding the Nightmare: Bradley's WIOA Testimony
1. The Demand-Driven Design
"WIOA is designed to be demand driven that is it's supposed to be responsive to local conditions and employers demands through more than 500 local Workforce areas"
"WIOA provides local control local Workforce boards for the most part are authorized to determine the specific mix of services and types of training"
The Promise:
2. The Universal Access Architecture
"WIOA provides Central points of service through the One-Stop delivery system with more than 2,000 American job centers throughout the country"
"WIOA also provides universal access to Career Services and has a priority of service for for Training Services to individuals with low incomes and others in need of significant skills training"
The Infrastructure:
3. The Evidence-Based Strategies
"WIOA emphasizes certain Workforce Development strategies such as sector Partnerships and career Pathways that have evidence-based outcomes behind them"
"WIOA emphasizes consumer Choice primarily through its system of individual training accounts"
The Approach:
4. The Accountability Framework
"WIOA has a performance accountability system with six main indicators of outcomes and these are common across all titles of WIOA"
"WIOA emphasizes coordination and Alignment through such mechanisms as required unified State planning so that programs are supposed to demonstrate that they're working together"
The Measurement:
Bradley's Critical Assessment: The Funding Crisis
"even with these elements WIOA has not fully realized its goals one problem is funding, in FY 23 programs and activities in the three major formula programs were funded at just over $3 billion this is about the same amount that it's been funded since 2000 which is a an inflation adjusted drop of about 50%"
The Reality Check:
Bradley's Vision for Improvement
"what can be done to improve the system one area would be to modernize the way people navigate the labor market and skills training more robust career navigation more strategies like Competency Based education and and prior learning assessments"
"another suggestion is to invest in evidence-based programs that focus on the skill needs of employers and there are several evidence-based programs we have sector strategies career Pathways apprenticeship re-entry programs"
His Call to Action:
"JFF urges leaders in Congress to act create a Workforce system that works for all where there are no dead ends to Economic Opportunity"
The WIOA Reality Check: Following Your Money
The Victims
4.5 Million Disconnected Youth
While $2.5 billion vanishes into a vast network of workforce boards, administrators, consultants, and contractors, 4.5 million young Americans aged 16-24 sit jobless and out of school. Meanwhile, 8 million jobs go unfilled across the United States.
This is the cruel mathematics of the poverty industrial complex:
The very population WIOA claims to serve represents the system's most valuable asset: their continued poverty. Each of the 4.5 million disconnected youth isn't a failure to be fixed but an opportunity to be captured—justifying more funding, more programs, more administrative positions.
Every unfilled job, every unemployed youth, every missed connection becomes a revenue opportunity. The wider the gap between need and service, the stronger the case for expansion. The 96% who never receive help aren't forgotten—they're the statistical foundation for next year's funding request.
This isn't system failure but system perfection: a machine that converts human desperation into institutional growth. The $2.5 billion that never reaches training hasn't "disappeared"—it's been successfully captured by those who've learned that managing poverty pays better than ending it.
Related Documents and Testimony Cited
Newark, New Jersey
Congressional Testimony
Government Documents
Academic and Think Tank Research Reports
Co-Founder & Executive Director at Shared City | Effective Charity Leader | Community Builder | 20+ Years in Community & Leadership Development | Committed to Putting People First | Creating Systemic Change
2wThank you for sharing this very important information. “This isn't about partisan politics. These hearings included both parties. This is about something more fundamental: how institutional self-preservation overshadows human need, and how those meant to fix poverty have learned to profit from it instead.”