Economic Report of the President 1994 - The American Presidency ...

Box l-5.—The National Service ProgramIn August 1993 the Congress passed the National and CommunityService Trust Act of 1993, '^d^^ti&^/^^wm N&-tional Service program. National Service provides participantsboth current compensation (at below-market wa^s) aad>duc&tiOTuglgrants of up to $4,725 per year td pay &* college andother post-secondary education. Participants also receive valuableon-the-job training, accumulate exi^loyih^it ^kiEsi tod acquiret^l-worid workexperience.The economic rationale for this program is threefold* First,employers may be reluctant to provide training in skills thatcan be utilized in a wide variety of employment applicationsbecause, if the employee leaves the firm soon thereafter, thefirm will fail to recoup the cost of its investment. Since the accumulationof employment skills is socially desirable, it may beeconomically efficient for the government to finance part of thistraining.Second, the decline in Federal revenue sharing has reducedthe intergovernmental resources available to State and localgovernments. These levels of government often know best whatservices their residents need most. Accordingly, the NationalService program provides in-kind resources (labor services) toprecisely those types of public and nonprofit organizations bestable to determine what services are required.Third, the National Service program provides all Americansthe opportunity to undertake community service positions byrelaxing the tradeoff that workers often face between currentcompensation and the richness of an employment experience.The program ensures that valuable but low-paid public servicepositions will not be the province of the wealthy.The National Service program is funded through an initialappropriation of $300 million over previous funding for relatedprograms. This is scheduled to rise to $500 million in 1995 and$700 million in 1996. At these funding levels, it is expectedthat the program will be able to support approximately 20,000participants in 1994 and about 100,000 participants over the3-year period covered by the legislation.A variety of evidence indicates that there has beenunderinvestment. First, while the statistical evidence is not unequivocal,the weight of it points to handsome rates of return onwell-planned investments in public infrastructure. Second, estimatedbenefit-cost ratios on specific infrastructure projects areoften quite high. Third, the ratio of public to private capital has42