WORKFORCE DEVELOPMENT, MIDDLE-SKILL JOBS AND ANTIPOVERTY POLICY. Harry J. Holzer Georgetown University The Urban Institute September 2008

Transcription

1 WORKFORCE DEVELOPMENT, MIDDLE-SKILL JOBS AND ANTIPOVERTY POLICY Harry J. Holzer Georgetown University The Urban Institute September 2008

2 Drawn From: Workforce Development As An Antipoverty Strategy in Cancian and Danziger eds. Changing Poverty. Russell Sage Foundation, 2009 America s Forgotten Middle-Skill Jobs: Education and Training Requirements over the Next Decade and Beyond (With R. Lerman), The Workforce Alliance, Washington DC, 2007 Better Workers for Better Jobs: Improving Worker Advancement in the Low-Wage Labor Market. The Hamilton Project, Brookings Institution, Washington DC, 2007.

3 The Paradox Growing Role of Skills in the Labor Market: Rising Working Poor, Hard-to-Employ, Youth (Dropouts and Even HS Grads) Some Consensus on Need to Invest More in Pre-K.Higher Education But Much Less Agreement on Funding for Workforce Development Efforts Declining Funds and Interest Over Time WHY??? Justified? Policy Implications?

4 Major Trends in Funding and Structure of Federal Workforce Programs Primary USDOL Programs MDTA, CETA, JTPA, WIA, 1999-present Over Time: More Local Authority (PICs, WIBs), Business Control, Worker Choice Less Public Employment and Training, More Work-First, More Universal

5 WIA Title I: Funding Streams for Adults, Youth and Dislocated Workers; Job Corps; etc. Title II: Adult Education Title III: Employment Service (Wagner- Peyser)

6 WIA, Title I Adults and Dislocated Workers: Core and Intensive Services Before Training Declining Shares Receiving Training Low-Income Adults: About 20% of Registrants for Services, 50% of Training Funding: $860M for Adults, $1.2B for Dislocated, $924M for Youth, $1.7B for Job Corps Total: Under $5.5B (2008 Dollars)

7 20,000 Figure 1 Worker Training in Primary DOL Programs, Training Budget (constant 2007 dollars, millions) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,

8 Expenditures, Real and Relative Since 1979: Real Funding has fallen by about 70% Since 1979: Relative Funding has fallen by about 87%:.30% of GDP to.04% of GDP Even Since Mid-80s: Real and Relative Declines Total Federal Expenditures on Employment and Training:.1% of GDP Lowest of any Industrial Nation

9 Other Employment and Training Programs for the Disadvantaged (USGAO, 2003) DHHS Programs TANF (Replaces WIN, JOBS): $325M Community Services and Social Services Block Grants Dept. of Education Programs State Vocational Rehabilitation Grants Perkins Act ($1.2B) Pell Grants! (Stafford Loans, Work-Study)

10 Pell Grants Rising Expenditures Over Time: $9B to $14B, (Current Dollars) Spence and Kiel: About 1/3 for Vocational Training Limited Use and Eligibility: Only Education at Accredited Colleges, Parts of Degree or Certificate Programs (Exclude Remedial), At Least Half Time Overall: Do Not Offset Declines in USDOL Programs

11 Why Has Funding and Interest Fallen? Perceptions of Ineffectiveness: Evaluation Literature Other Approaches, Other Problems, Changing Labor Market? Politics Important but Changing Interest in New Approaches

12 Effectiveness: Why Not? Weak Basic Skills (Complementarities) Weak Motivation (Youth, Parents) Employer Skepticism (Signals)

13 Evaluation Literature Good Reviews: Heckman et al. (1999), Lalonde (2003) Variance in Results Depends on : 1)Adults v. Youth; 2) Mandatory v. Voluntary; 3) Disadvantaged v. Hard to Employ; 4) Duration/Intensity of Treatment; 5) Nature of Treatment (Classroom, OJT, Work Experience etc.); 6) Scale; 7) Evaluation Data and Methods

14 Some Generalizations Greater Impacts for Adult Women than Men Greater Impacts for Adults than Youth Modest Impacts for Modest Expenditures

15 Disadvantaged Adults National JTPA Study Welfare Recipients: 1) National Evaluation of Welfare to Work Strategies (NEWWS); 2) GAIN: Riverside, LA, etc. Hard-to-Employ: 1) National Supported Work (NSW); 2) Other Work Experience Programs SWIM, etc. Employer-Oriented: Center for Employment Training - San Jose v. Replication

16 Summary of Results JTPA Net Costs: $ per assignee Net Impacts: $ per year for years 2-4 Some Fadeout by Year 5 Sensitivity to Discount Rate, Costs of Taxation Overall: Large Impacts (Double?) per Dollar Spent!

17 Summary of Results (Cont d) NEWWS: Large Impacts in Portland, Modest elsewhere (Labor Force Attachment v. Human Capital) GAIN: Riverside (Work Experience) v. LA (Training) NSW, SWIM: Large Returns to Work Experience plus Supports/Services NSW Men: Younger v. Older (Impacts on Recidivism) CET: Large Impacts for Employer-Focused Training in San Jose; Replication Much Less Successful (?) Jobs Plus, ERA, New Hope: Incentives, Supports, Services Community College: One Year or More, Certification

18 Disadvantaged Youth: Out of JTPA: No Positive Impacts School Job Corps: Expensive; Positive Initial Impacts than Fade But Administrative v. Survey Data Teens v Year Olds Recidivism Effects? Youth Service Corps (and Youth Build)? National Guard ChalleNGe?

19 Disadvantaged Youth: In School Career Academies: 12% Earnings Impacts Overall, 18% for At-Risk Young Men: No Fade Out! Also Tech Prep, Other School-to-Career Opening Doors: Louisiana v. Brooklyn Pell Grants YIEPP: Guaranteed Jobs in High School Youth Development (Big Brother/Big Sister, CAS/Hererra,Quantum Opportunities)

20 Other Approaches: More Cost- Effective? Financial Incentives: Raise Employment EITC: $40B per year; Proposed Extensions; Raise Earnings by roughly $1.25 per Dollar Spent Impacts of JTPA v. EITC???

21 Other Problems: More Serious? Achievement Gap! Cognitive and Non-Cognitive Skills Heckman Critique: Diminishing Returns to Expenditures with Age Pre-K v. Youth, Adults True??? JTPA, NSW, CET, Career Academies. Pre-K: Scale, Fadeout in Recent Evidence (including state-level programs) Early Childhood v. Youth/Adult Programs: Complements, Not Substitutes!

22 Changing Labor Market? Labor Market Polarization and Disappearing Middle (Autor et al.).yes, but no Hourglass or Dumbbell Immigration and Offshoring Yes, but Middle Jobs Remain Baby Boomer Retirements and Replacement Hiring

23 Middle-Skill Jobs Report Consider: 1) Employment and Wage Growth, by Occupation; 2) BLS Projections, , By Occupation; 3) Actual and Projected Labor Supply by Occupation; 4) State Reports and Surveys Market Adjustments? Yes, but Slow and Imperfect.Tightness and Shortages

24 Definition of Mid-Skill Jobs Those Requiring Significant Training Beyond Secondary School Less than Bachelor s Degree By Occupation: Below Professional/Managerial But Above Service

25 Construction First-line Supervisors/Managers Inspectors Electricians Plumbers Engineering Technicians Healthcare Support Dental Hygienists Radiation Therapists Diagnostic Sonographers Radiologic Technicians Respiratory Therapists Occupational Therapist Assistants Physical Therapist Assistants Prominent Middle-Skill Occupations

26 Prominent Middle-Skill Occupations (Cont d) Law Detectives/Investigators Paralegals/Legal Assistants Manufacturing First-line Supervisors/Managers Machinists Welders, Cutters, Solderers Protective Services Police Officers Fire Fighters

27 Employment Shares by Occupational Skill Level, 1986 and : High 29% Middle 55% Low 16% 2006: High 35% Middle 48% Low 17%

28 Employment in Occupational Categories, Registered Nurses: 1.5M to 2.5M Health Technicians: 400,000 to >1M Construction: 5M to 9M

29 Real Wage Trends, Registered Nurses 18% Speech and Respiratory Therapists 10-14% Radiological Technicians 23% Electricians and Elect. Technicians 10-14% [Supervisors: 22%] Aircraft Engine Mechanics: 20%

30 Earnings Associated with College Degrees Bachelor s Degree v. High School Only: 62% Associate s Degree v. High School Only: 33%

31 BLS Projections of Total Job Openings, High: 33% Middle: 45% Low: 22%

32 Labor Supply: Actual ( ) v. Projected ( ) Changes (The Aspen Institute) <HS -12% -2% HS Only -8% -3% Some College 11% 1% BA or Higher 9% 3%

33 Behind the Supply Changes Baby Boomer Retirements Replacement By Immigrants: Concentration at Both Ends of Education Spectrum Delayed Retirement: Top and Bottom of Labor Market; Less in the Middle Offshoring??? Locational Biases; Top and Bottom v. Middle; Specific Skills v. Overall Labor Market

34 State/Industry Reports Reports at State Level Indicating Strongest Demand or Shortages in Mid- Skill Jobs (Washington, Connecticut, Virginia, Minnesota) NAM: Machinists and Technicians Chamber of Commerce: Employer Difficulties Even in Slack Labor Markets

35 POLITICS Lack of Strong Constituencies Business, Liberal Groups have other interests and other priorities Starting to Change: States Concerned about Economic Development and Skill Shortages in Key Industries Combining Workforce and Economic Development; Also Interest in Reducing Costs of Poverty (Incarceration, Medicaid as well as Lost Earnings and Transfers)

36 Newer Approaches: Combine Ec. Development with Anti-Poverty Policy Problems of Poor: 1) Skills; 2) Lack Access to Good Jobs ; 3) Weak Financial Incentives; 4) Instability (Child Care, Transportation) Programs That Combine: 1) Skills Credentials; 2) Demand-Side Orientation; and 3) Work Supports - Child Care, Transportation, Pre- and Post-Placement; Stipends Models: Sectoral, Career Pathways, Incumbent Worker Intermediaries! Promising Examples: Quest, Wisconsin RTP, ECCLI (MA), statewide efforts in AK, KY, PA.Integrate Economic Development and Workforce Development Need Evaluation! Caution: Conflict between Economic Development and Poverty Reduction

37 Other Populations: Ex-Offenders and Youth Center for Employment Opportunity: Transitional Jobs; Impact on Recidivism for Those Who Enter Quickly after Release Comprehensive Approaches: Harlem Children Zone, Youth Opportunity Sites Need Evaluation!

38 Conclusion Evidence is Mixed But Many Success Stories (JTPA, NSW, Career Academies, etc.) Stereotype that Nothing Works for Adults or Youth is clearly incorrect! Declines in Funding Unwarranted Some restoration appropriate (but consolidation as well) Pell Grants: Important but not the entire Story! Most Promising Models (Related to Ec. Development): Need Expansion Plus More Evaluation! Workforce Development: Part of a Broader Package that also includes On-Going Supports

39 Policy Implications Expand Pell Grants plus Reforms (Dynarski) WIA: More Funding, More State-Level Industry- Driven System Youth: In-School v. Out-of-School Reduce/Recover Dropouts, Expand Access to Postsecondary Hard-to-Employ: Work Experience plus Supports and Services Evaluate!

40 What Is Needed: State and Local Advancement Systems Identification of Growing Industries with Good Jobs Multiple Career Pathways within Sectors Intermediaries: Bring Together Workers, Training Providers, Employers Access to Supports and Services Incentives to Scale Up Evaluation! (See Holzer, Better Workers for Better Jobs, Hamilton Project, Brookings, 2007)