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Issues 2012

No.21 August 2012


Whither Workforce Training?

Diana Furchtgott-Roth,[1] Senior Fellow, Manhattan Institute

Manhattan Institute.

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With unemployment rates exceeding 8 percent for over three years, increased focus has been placed on workforce training and job-search assistance for the unemployed. On June 14 in Cleveland, at Cuyahoga Community College, President Obama declared: "I have a plan to give 2 million more Americans the chance to go to community colleges just like this one and learn the skills that businesses are looking for right now."

The administration now administers 47 programs at a cost of $18 billion annually. However well-intentioned these programs, they are costly, many produce mixed results, and there is much overlap within the federal job training programs.

Workforce training programs have existed since the 1960s and have generally been unsuccessful: they have been expensive and have not fulfilled their goals. From the Comprehensive Employment and Training Act in the 1970s, to the Job Training Partnership Act in the 1980s, to the multitude of programs today, federal job training programs have disappointed their proponents.

Most of the major federal job training programs have had difficulty meeting even the most modest of targeted goals, and there is often a mismatch between training programs and jobs offered. There is a substantial demand for people to work in the health-care sector, for example, but training programs for nurses are oversubscribed.

Should the government wish to fund training programs, it makes the most sense to block-grant the $18 billion using a state population and unemployment formula and devolve the programs to the states. The real question is why the federal government is in the job training business at all, because it has little knowledge of individual states' needs. It would be far better for individual states to raise taxes and craft their own job training programs, or to contract with private companies and community colleges to do so.

The first part of this issue brief reviews the success rate of the major job training programs. The second part presents alternatives from the administration and the House of Representatives. The issue brief concludes with recommendations.

Major Job Training Programs Have Low Success Rates

The U.S. Department of Labor's Employment and Training Administration (ETA) administers most job training programs. Two of the largest are the Workforce Investment Act (WIA) programs (including the Adult Worker Program, Dislocated Worker Program, and National Emergency Grants) and the Trade Adjustment Assistance program. Together, these programs trained 8.7 million people in 2011. Other programs include the High Growth Job Training Initiative, Community-Based Job Training Grants, American Recovery and Reinvestment Act High Growth and Emerging Industries Grants, and Green Jobs Innovation Fund Grants. In total, 10 million people were trained by ETA programs in 2011.

It is possible to evaluate the effectiveness of these programs from ETA's Workforce System Results, published on a quarterly and an annual basis. The most recent data available show program effectiveness over a twelve-month period, ending December 31, 2011.

The table at the end shows measures of success for 14 job training programs. Programs are evaluated based on jobs found by trainees (the entered employment rate), the length of time they keep the jobs (the employment retention rate), and the salaries (six months' average earnings).[2]

The entered employment rate includes only those who were unemployed when they came into the program; it does not count incumbent workers who upgraded their skills. The employment retention rate is of those who were unemployed upon entering the program and the percentage who retained work in the second and third quarter after completing training.

The results are poor. While many programs come close to meeting their targeted goals—and some even exceed expectations—in many cases, the targets are surprisingly low. For instance the target "Entered Employment Rates" for many programs, such as the Indian and Native American Adult Program, Reintegration of Ex-Offenders, Trade Adjustment Assistance, a Workforce Investment Act Adult and Dislocated Worker programs all hovered under 60 percent. The Employment Retention Rate had slightly higher goals of 65 percent to 83 percent, and was one area where some programs exceeded goals.

The Workforce Investment Act Adult Program is one of the largest training programs, providing services to 7.2 million people in 2011. Fifty-six percent of trained workers entered employment. Of those, 81 percent were employed for two quarters following the quarter they started their job, or 45 percent of the original pool of workers. Average earnings for those workers were $13,619 for six months, or $27,238 annually.

The highest-paying positions come from Registered Apprenticeship, with participants earning an average of $22,525 over a six-month period. The program also had relatively high employment and retention rates: 69 percent and 85 percent, respectively. The programs with the next highest-earning workers were National Emergency Grants and Trade Adjustment Assistance, with average six-month incomes of $19,006 and $18,563, respectively. Training programs whose workers received the lowest average six-month pay were the Senior Community Service Employment Program, at $7,685; Registration of Ex-Offenders at $9,818; and National Farmworker Jobs Program, at $10,005. Actual earnings exceeded annual goals in all of the programs listed.

The Workforce Investment Act Youthful Offender Initiative was a particularly poor performer. The program's placement rate for out-of-school youth aged 18 and older was just 35 percent, compared with a goal of 56 percent. Furthermore, the recidivism rate for youth aged 14 to 17 was 45 percent, falling short of the initiative's 16 percent goal.

Pilot Programs

The Labor Department is aware of its low success rates, and has attempted various pilot projects to improve results. Below are highlights of recent pilot programs undertaken by the Employment and Training Administration.

The High Growth Job Training Initiative

The High Growth Job Training Initiative was a program aimed at providing job seekers training to go into high-demand fields, most often health care and advanced manufacturing industries. It made 161 grants, ranging from $95,000 to $12 million in 2001–07. The evaluation research for the final report issued by the Urban Institute was conducted at nine grantee sites in 2007 and 2008, at which point approximately 55 percent of the grants were still active.

Five of the nine grantees studied were selected for further data analysis based on sufficient numbers of trainees enrolled. The five grantees were: Carpenters Joint Apprenticeship Program, in St. Louis; Chicago Women in Trades; Columbia Gorge Community College, in Oregon; Community Learning Center, in Fort Worth; and Lower Rio Grande Valley Workforce Development Board / South Texas College.

The Carpenters Joint Apprenticeship Program provided an eight-week training program that provided credentials in construction and manufacturing, as well as community college credit. Prior to the program, participants' employment levels ranged from 45 percent to 52 percent; afterward, they were 62–65 percent. Participants' pre-program quarterly earnings were $1,200–$1,800, which increased to over $2,400 in the two quarters after the program.

Employment levels of Chicago Women in Trades participants were about 60–65 percent in the quarters preceding the program, and 65–74 percent in the two periods following the program. However, earnings did not show a similar increase. Average quarterly earnings of participants were about $3,000–$3,500 before the program and $2,800–$3,400 after, indicating that the program had negative consequences.

The Columbia Gorge Community College trained students to become certified nursing assistants during a three-month program. Participants' employment levels were 45–51 percent before the program, and over 70 percent after. Participants' quarterly earnings were $1,400–$1,600 before the program, and over $2,800 after.

Community Learning Center offered a three-month training program to dislocated workers and other adults in aircraft assembly skills. Results for women and men in the training program were analyzed separately. For men, pre-program employment was 48–52 percent, and pre-program quarterly earnings were $4,000–$4,500. After the program, men's employment was 58–70 percent, and earnings were $4,300–$5,200. For women, pre-program employment was 55–73 percent, and earnings were $4,900–$5,700. After the program, women's employment was 55–65 percent, and earnings were $5,100–$6,450.

The Lower Rio Grande Valley Workforce Development Board / South Texas College program provided registered apprenticeships in "advanced manufacturing occupations" lasting three to four years. Participants' pre-program employment rates were 81–88 percent; after the program, they were 87–88 percent. Pre-program quarterly earnings averaged $6,200–$7,400, and post-program earnings were $7,300–$7,600.

The Urban Institute's evaluation concluded: "The findings provided no consistent evidence of the impacts of [High Growth Job Training Initiative]-funded training. However, descriptively, all of the five sites show small to modest improvements in employment and earnings from the two years prior to entering in the program to the time of in program measurement."[3] In other words, while earnings and employment increased, the program did no better than traditional WIA programs.

Individual Training Accounts

This experiment examined three different models of Individual Training Account (ITA) services, which are part of the Workforce Investment Act program. People receive a lump sum under Individual Training Accounts to purchase training of their choice. The three models of ITA were Structured Choice, Guided Choice, and Maximum Choice. Participants were randomly assigned to one of the three models.

Structured Choice required intensive counseling, and counselors could deny participants' desired training program to steer them toward higher-return areas. Structured Choice also allowed counselors to determine the amount of money that individuals would receive in their accounts, and they could give them higher amounts of funds than those in the Guided Choice and Maximum Choice models. Guided Choice required counseling but was less intensive, and counselors could not deny individuals their desired training program. Under Maximum Choice, counseling was voluntary. Guided Choice and Maximum Choice accounts had a much lower cap on funds than the Structured Choice accounts.

Participation in training varied across the three groups: 73 percent of Structured Choice individuals participated, 71 percent of Guided Choice individuals participated, and 77 percent of Maximum Choice individuals participated. Training completion rates were 62 percent, 58 percent, and 64 percent, for Structured Choice, Guided Choice, and Maximum Choice participants, respectively. Structured Choice recipients had the highest earnings and were most likely to remain employed in the occupation for which they received training.

A study by Mathematica Policy Research analyzing the program found that switching from Guided Choice to Structured Choice would increase benefits to individual participants and society without increasing net government costs. Maximum Choice might lead more individuals to utilize individual accounts for training "but yield similar benefits and costs for society as a whole."[4] The study found better training participation and completion rates among the Structured Choice and Maximum Choice ITA recipients than the recipients of the Guided Choice model, which is the status quo. Structured Choice recipients had the highest earnings and were most likely to remain employed in the occupation for which they received training.

Indian and Native American Summer Youth Employment Initiatives and the 2009 Recovery Act

Unemployment rates for Native Americans have always been higher than for the population as a whole. The American Recovery and Reinvestment Act allocated $17.8 million for youth job training through the Labor Department's Indian and Native American Supplemental Youth Services Program and the Summer Youth Employment Initiative.

The goals were to develop new and existing strategies for at-risk Native Americans through education and work training through assessments and certifications. Grantees would build a connection with businesses and economic sectors, especially employers for green jobs, who are looking for employees. ETA had grantees report on two performance measures: youth work-readiness attainment and youth employment-program completion rate.

The grantees served 4,060 young people in 2009–10. Although surveys showed that the participants were satisfied with their training and employment outcomes, there was no way to track the youth after the program was complete. Placement for program participants was limited. They could not work at golf courses, swimming pools, or casinos, making it difficult for staff to find placements.

The Government Accountability Office (GAO) has published a series of reports on Workforce Investment Act programs. In 2005, GAO reported that while $2.4 billion in WIA funds were set aside in 2003 to train adults and dislocated workers and $929 million of those funds were used for training, little was known about nationwide training outcomes because of deficiencies in the Workforce Investment Act Standardized Record Data (WIASRD) database. This deficiency has now been partly addressed with the addition of new data, described above.[5]

In 2007, another GAO report cited concerns about a lack of integration of the Wagner-Peyser Employment Services and the One-Stop system. The report also pointed out problems with funding inconsistencies, stating: "WIA's formulas that were used to allocate funds to states do not reflect current program design and have caused wide fluctuations in funding levels from year to year that do not reflect actual layoff activity."[6] Furthermore, the report commented that the Department of Labor had taken little action to conduct evaluations of WIA programs. Some evaluations have since been published.

Another 2007 GAO report reiterated concerns that Wagner-Peyser Employment Service Centers focusing on job search and placement assistance remained separate from One-Stop centers in some states.[7] This is because the programs are funded separately, so two different job training programs can exist in the same facilities. This is a major reason for reform proposals.

In 2009, GAO reported that the Department of Labor had improved performance outcome data, highlighting the Wage Record Interchange System and implementation of a data system enabling individual participant progress to be tracked. However, problems remained with funding stability, particularly for the Dislocated Workers Program. Also, the GAO characterized Labor as "slow to comply" with WIA requirements of program evaluation.[8]

A GAO audit conducted from November 2010 to January 2012 found that successful collaboration between workforce boards and employers grew out of programs aimed at workforce development in a specific sector, rather than for a specific employer. However, while initiatives were aimed at producing high-skilled workers through skill upgrades, GAO found that most employers utilized local One-Stop centers to fill low-skilled positions.[9]

Proposed Changes in Job Training Programs

Both President Obama and the House Republicans have proposed alternatives to the current system. President Obama is in favor of expanding the current system, while the House Republicans support consolidating the programs and devolving them to the states.

President Obama has introduced four separate workforce reform initiatives. In 2011, he proposed the American Jobs Act, which would add two more programs to the workforce training system, at an additional cost of $9 billion. He requested $4 billion for "Reemployment Now," which includes a Bridge to Work program that would match individuals collecting emergency unemployment insurance with short-term work-experience opportunities. Another program, "Pathways Back to Work," would provide low-income youth and adults with training opportunities in growth industries, at a cost of $5 billion.[10]

Neither of these programs passed Congress. In the 2012 State of the Union address, President Obama suggested establishing just one program to help the unemployed. However, no specifics were attached.

In the 2013 budget, released in February 2012, the president proposed two new job training programs, at a cost of over $20 billion. He suggested a new program, "Community College to Career Fund," at a cost of $8 billion; and "Pathways Back to Work," at $12.5 billion. Pathways Back to Work was previously proposed in 2011, but at a cost of $5 billion.

In March, the president proposed consolidating Trade Adjustment Assistance and the Workforce Investment Act Dislocated Workers Program into one Universal Displaced Worker Program.[11] Currently, generous training and support are available to workers who were displaced because of trade. The new system would expand training to enable all displaced workers to qualify, not just those who were displaced by trade. Training would include:

  • Job-search assistance, including basic résumé skills and assessing whether training is necessary;
  • Training awards (up to $4,000 per year, renewable a second year to complete highly skilled technical training);
  • Stipends to help with the expense of looking for work, for $150–$300 per week, up to 78 weeks. The stipend is aimed at covering child care, transportation, and other expenses associated with a job search;
  • Relocation allowance of up to $1,250;
  • Two years of wage insurance for older workers (aged 50 and older) who take new, full-time jobs that pay less than $50,000 and less than their previous jobs; and
  • An Online American Job Center, at a cost of $50 million, which would provide a single access point to bring together all the resources and One-Stop Career centers for job seekers and employers.

The administration's 2013 budget estimates that the program would cost $5 billion in its first year (2014) and $35 billion from 2013 to 2022. It notes that the proposal would save $7.7 billion in discretionary spending over the same period.[12] In other words, the consolidation of services would create a net increase in spending of $27 billion.

The major Republican proposal, voted out of the House Committee on Education and the Workforce on June 7, is the Workforce Investment Improvement Act of 2012, introduced by Republican representatives Virginia Foxx (NC), Buck McKeon (CA), and Joe Heck (NV).

The act would streamline the multitude of workforce development programs, combining 37 existing programs into a new Workforce Investment Fund. Ten workforce investment programs would not be consolidated for a variety of reasons: some do not fall under the committee's jurisdiction; some have a larger focus than job training; and others exist in laws that are due for reauthorization at the end of 2012.

The fund would consolidate all major workforce development into the One-Stop Career Centers, thereby eliminating duplication and inefficiency in the existing programs. To ensure that the goals of the small special-population-targeted programs continue to be addressed, the bill would require states to specify how they will serve specific types of unemployed workers (e.g., low-income, long-term, and veterans).

The bill would increase business engagement with Workforce Investment Boards (WIBs) by changing the boards' charter, size, and composition. The current requirement that local WIBs prioritize low-income individuals would be eliminated to allow local areas more flexibility in getting all the unemployed back to work. WIBs would be required to develop and report plans to better coordinate with local employers' needs.

The bill emphasizes attaining industry-recognized credentials and using these attainment rates in evaluating programs. Current law requires that business leaders make up a simple majority on WIBs, but the bill would mandate that business leaders make up a two-thirds majority. These would be leaders who "represent businesses, including large and small businesses, with immediate and long-term employment opportunities in in-demand industries and other occupations important to the local economy." The bill removes the federal requirement that state legislators and labor-union officials be on the board and therefore makes the boards smaller and more manageable. The remaining one-third would be appointed by governors and chief elected officials and could include state legislators and representatives from community colleges, youth organizations, veterans' service organizations, and labor unions.

Services would be improved for participants. A percentage of funds would be reserved for job training activities, rather than administrative overhead, and core and intensive services would be combined into "work-ready" services, to allow individuals quick access to the best training for their needs. In order to better assess outcomes, the bill would create common performance measures among the Workforce Investment Funds, Adult Education, and Vocational Rehabilitations programs.

The secretary of labor would be required to reduce funding to states failing to meet these performance requirements for two consecutive years; in turn, governors would be required to reduce funding to WIBs failing to meet performance measures for two years. Local WIBs would be required to develop a reorganization plan after failing to meet performance measures for two years. Another protection of taxpayer dollars would be that WIBs would be required to prioritize private-sector or public-sector employment placement. Finally, One-Stop operators would be chosen through a competitive process rather than through automatic government management.

The bill also mandates a program structure providing uniform guidelines for state and local areas. Included are rules designed to reduce the amount of funds siphoned off by bureaucrats and maximize the amount spent on activities that directly affect the unemployed: the secretary is allowed to use only one-half of 1 percent of the funds for its activities; state and local WIBs are limited to 5 percent and 10 percent, respectively, for their administrative duties.

Conclusion

Numerous and expensive federal workforce training programs have failed to provide necessary skills and career guidance to legions of unemployed American workers. President Obama has nevertheless proposed expanding federal expenditures on the current system by $27.3 billion. House Republicans, by contrast, have forwarded a plan to consolidate these workforce initiatives and devolve them to the states.

There is no doubt that those who enroll in federal worker training programs are a difficult-to-serve population. Many have poor job histories and lack the basic skills to benefit from on-the-job training. However, if we are to make progress, it is crucial that workforce initiatives be more than just employment sinecures for those who provide the training. Programs must be held accountable not just for spending money or recruiting trainees but for equipping those they are seeking to help with marketable skills and placing them in legitimate jobs. If the programs remain, state and local governments are in the best position to do this.

A central question remains: Why is the federal government involved in workforce training at all? The consolidation proposed by the House Education and Workforce Committee is a step in the right direction but is no substitution for complete elimination.

The reason for the emphasis on worker training is the poor quality of today's secondary school education. High school graduates lack the basic skills to benefit from on-the-job training. Hence, they become unemployed and enroll in Labor Department training programs. America needs to get to the root of the failure of workforce training programs: the failure of secondary school education.

NOTES

  1. Cumulative four quarters unless otherwise indicated.
  2. Entered employment rate is based on unemployment insurance wage record and grantee supplemental data for the exit cohort: January 1, 2010–December 31, 2010.
  3. Employment retention rate is based on unemployment insurance wage record and grantee supplemental data for the exit cohort: January 1, 2010–December 31, 2010, and July 1, 2009–June 30, 2010, respectively.
  4. Average earnings are based on unemployment insurance wage record and grantee supplemental data for the exit cohort: January 1, 2010–December 31, 2010, and July 1, 2009–June 30, 2010, respectively.
  5. Program-to-date data as of program inception in spring 2006.
  6. Target based on program goal to reduce the recidivism rate by half of the national rate.
  7. Measures exclude Guam. Beginning this quarter, the average earnings indicator will be calculated by dividing the total earnings by total people counted in the employment retention rate and will not be calculated as an average of all states' average earnings.
  8. 9 Measures exclude Guam.
  9. Due to the long-term nature of participant activity and performance outcomes, the results are program-to-data for the second cycle of YouthBuild grants, awarded in 2007, and completing in 2010.
  10. Program-to-data for currently operating projects.

ENDNOTES

  1. The author is grateful for the research support of Claire Rogers, Christopher Bien, Leah Loversky, and Chi Zhang.
  2. The entered employment rate is defined as "Of those who are not employed at the date of participation: the number of adult participants who are employed in the first quarter after the exit quarter divided by the number of adult participants who exit during the quarter." The employment retention rate is defined as "Of those who are employed in the first quarter after the exit quarter: the number of adult participants who are employed in both the second and third quarters after the exit quarter divided by the number of adult participants who exit during the quarter." The six months' average earnings is defined as "the average of employees' total earnings for the second and third quarters of their employment after completing their training program."
  3. Lauren Eyster et al., Implementation and Early Training Outcomes of the High Growth Job Training Initiative: Final Report, Urban Institute Center on Labor, Human Services, and Population (June 2010), http://wdr.doleta.gov/research/FullText_Documents/ETAOP_2011_20.pdf.
  4. Irma Perez-Johnson, Quinn Moore, and Robert Santillano, Improving Effectiveness of Individual Training Accounts: Long-Term Findings from an Experimental Evaluation of Three Service Delivery Models, Mathematica Policy Research (October 2011), http://wdr.doleta.gov/research/FullText_Documents/ETAOP_2012_06.pdf.
  5. Government Accountability Office, Workforce Investment Act: Substantial Funds Are Used for Training, but Little Is Known Nationally about Training Outcomes, GAO-05-650 (June 2005), http://www.gao.gov/new.items/d05650.pdf.
  6. Idem, Workforce Investment Act: Additional Actions Would Further Improve the Workforce System, GAO-07-1051T (June 28, 2007), http://www.gao.gov/products/GAO-07-1051T.
  7. Idem, Workforce Investment Act: One-Stop System Infrastructure Continues to Evolve, but Labor Should Take Action to Require That All Employment Service Offices Are Part of the System, GAO-07-1096 (September 4, 2007), http://www.gao.gov/products/GAO-07-1096.
  8. Idem, Workforce Investment Act: Labor Has Made Progress in Addressing Areas of Concern, but More Focus Needed on Understanding What Works and What Doesn't, GAO-09-396T (February 26, 2009), http://www.gao.gov/products/GAO-09-396T.
  9. Idem, Workforce Investment Act: Innovative Collaborations between Workforce Boards and Employers Helped Meet Urgent Local Workforce Needs, GAO-12-419T (February 16, 2012), http://www.gao.gov/products/GAO-12-419T.
  10. White House, "Read the American Jobs Act" (September 12, 2011), http://www.whitehouse.gov/economy/jobsact/read-the-bill.
  11. White House, "White House Announces Details on President's Plan to Provide Americans with Job Training and Employment Services (March 12, 2012), http://www.whitehouse.gov/the-press-office/2012/03/12/white-house-announces-details-president-s-plan-provide-americans-job-tra.
  12. U.S. Office of Management and Budget, fiscal year 2013, budget of the U.S. government, http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/budget.pdf.


 
 
 

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