Evelyn Ganzglass Center for Law and Social Policy

WPFP/EARN Economic Development Academy September 4-5, 2008

Leveraging State ED Investments to Improve

Outcomes for Low-Skill, Low-Income Workers Efforts to align education & training capacity with ED goals

Recruitment incentives State customized training programs (recruitment, expansion, retention)

Cultural DifferencesWorkforce Development

Economic Development

Origins War on poverty (equity) Local competition for business (recruitment)

Evolution Dual customer Competitiveness

Funding Federal State/local

Focus Supply-side Demand-side

Customer Job seeker/employer Employer

Accountability High Loose

Success Measures

Employment & earnings Jobs

Culture Implementing programs Making deals

State Workforce & Economic Development Coordination & AlignmentAdministrative strategiesRegional planning & sector/cluster

partnershipsTransportation & infrastructure

funding Special State FundingCenters of ExcellenceWork Readiness Certification

Funding to upgrade CTC capacity in key industries (CA) Community College Incumbent Worker

Responsive Training Fund: upgrade training in high growth industries & build basic skills bridges to high-end career pathways

The Job Development Incentive Training Fund: no or low cost upgrade training for skilled & low-wage entry-level workers (1 moves up & other fills in behind)

Centers of Excellence (WA)Focused on driver industries where AA and certificate

level training can increase industries’ competitivenessBroker information & resources on industry trends

and best practices for stakeholdersCoordinate, coach & mentor to help build seamless

ed and work-related pipelines for their industries Stimulate student interest in training where

demand for skills outstrips supply Each center is charged with developing career

pathways- including I-BEST and bridge programs- to at least to 1-year certificate “tipping point”

Certified “Work Ready” Communities & Regions (GA)

Communities must demonstrate: 1.A commitment to improving their public high

school graduation rate & minimum county HSGR of 70% (some leeway of meet adult criteria)

2.Min. level of adults in certain groups,( incl. GED, unemployed) certified as “Work Ready” (State funded ACT Work Keys assessment )

Work Ready Regions: Competitive grants to drive ed/trng alignment to regional strategic industries

Discussion Questions 1. How effective are these strategies

from an economic development perspective for recruitment, expansion and retention? From a low-income advocate perspective?

2. Do you have other useful examples of Education: ED alignment efforts that benefit on low-skill, low-income populations?

States Incentives & Job Quality Standards Types of standards:Wages (% of fed/state minimum wage or

poverty, prevailing wage, living wage)Full-time, permanent jobs Benefits (VT: paid leave; a few locals)No targeting, except for training

incentivesNo training or hiring requirements

NW Area Foundation Wage & Benefit MetricJob Attribute

PointsFull-time position 3Permanent position 1Wage exceeds mean 4Group health insurance provided 2Employer contributes to plan 1Sick leave and/or vacation time 1Financial asset building

mechanism 1Trade & technology-specific skills

1

Workplace skills training 1

Score11-15 Points ***5-10 Points**0-4 Points *Sample Report

Types Company profiles Wage and benefits profiles per

sector Wage and benefits profiles for

jobs created and retained

Strengthening Employment Standards Apply minimum standards for all companies receiving a

subsidy; don’t negotiate on a case-by-case basis Include wage rates &/or health benefits as part of a

formula for evaluating applications or calculating subsidy eligibility

Index wage standardsRequire employers to provide, not just offer, health

insurance; provide training for front-line workersProvide -ongoing monitoring and enforcement of claw

back provisions to ensure complianceBundle standards local hiring and 1st sources

requirements

Local E&T Community Benefit AgreementsKey Components:Labor agreements Prevailing wages and benefits Pre-apprenticeship & apprenticeships Local hiring requirements First source agreements & referral

systems Developers must pay into Training

FundTIF funds can be used for training

Could states require similar CBAs?1. In state incentive deals?2. In sector & cluster-based initiatives? 3. What local linkages would be required to make

CBAs work? State funding &/or MOU to make WIA one-

stops 1st source referral system? Data sharing with one-stops on companies that

have gotten subsidies Could CBAs work if the development project

isn’t located in a distressed community?

Customized Training (CT) OverviewTraining designed to meet the specific

requirements of an employer or group of employers

New hire trainingIncumbent worker upgrade trainingShort-term, quick turn-around, mostly not-

for-creditProvided on-and off-job site Degrees of customization

CT Intended OutcomesWorkers Employers State/Economy

Increase employment (new hire & retention)

Improve productivity & competitiveness

Promote economic growth (direct impact & multiplier effect)

Increase earnings, prevent loss

Help implement new technology/production methods

Create more (good ) jobs through business attraction, retention, expansion

Promote advancement

Provide access to a qualified workforce

Increase tax revenue

Increase employer investment in training

Achieve UI savings

Economic Development Focus

34%

40%

26%

Recruitment

Expansion

Upgrade & Retention

Expenditures as a percentage of total state funds

Source: Graves and Duscha, The Employer As Client: State-Financed Customized Training, 2006

Programs often target traded/ basic sectors, those threatened by out-of-state competition

27

18

10

0

5

10

15

20

25

30

Economic Development

Workforce Agency

Community & Technical Colleges

Which Departments Administer Customized Training Programs?

Number of Programs

Source: Graves and Duscha, The Employer As Client: State-Financed Customized Training,2006

Providers: employers, for-profit, non-profit, CTC’s, in-house (GA, AL)

42%

38%

17%

3% State Funding Sources

General Revenue

UI Offset

Bonds

Tax Credits/Lottery Funds

Expenditures as a percentage of total state funds

Source: Graves and Duscha, The Employer As Client: State-Financed Customized Training, 2006

State Training Tax CreditsAt least 6 states have tax credits for

employer provided trainingServe same function as or complementary

to CT programs (cover cost of wages (up to a limit) during training)

Some administered like and/or in conjunction with grant programs (must submit training plan, instructional materials and documentation )

Evaluation FindingsKY: CT’s employment& earnings impacts

greater than for other incentives & financing; 5 yr earnings impacts are 4X the magnitude of short-term impacts

CA: Wages of completers consistently higher than controls, especially in slowing economy; greater employment stability

CA: Improved company performance; ability to change

MA: Firms tend to benefit more from training than workers

Strategies for Increasing AccountabilityTA and training planQuality trainingEmployer-education partnershipsMatch requirementsPerformance-based contractsReimbursement v up-front payment Eligibility for subsequent contracts

Leverage Points for Increasing Access

Leverage Points

State policy options

Eligibility •Limited to front-line workers•State resident

Allowable activities

•Allowing basic skills/ESL instruction

Adjustments •On wages, length of training, training provider, allowable activities, match requirement

Leverage Points for Increasing Access (2)

Leverage Points State policy options

Scoring proposals Preference for:•High poverty/unemployment areas•High level of employer investment in training•Firms with low turnover•Small business

Set-asides •Targeted populations•Basic skills

Basic Skills/ESL Design Options Integrated into program Set-aside / explicit focus

Reduces stigma attached to remediation

Basic skills/ESL taught in context

Accelerates learning (non-sequential)

Feeder programRequires articulation

and referral

Dedicated funding sourceAbility to focus more on

worker needsBut may lose employer

interest and buy-inNJ: Employers not willing to

provide match because training was too generic so state removed match requirement

MN: sustained demand for program

Credit/credentials v Non-credit For credit Non-creditBenefit to worker:

opportunity to build toward postsecondary credential

Academic credit more likely if training is provided by CC

Can slow down ability to respond in a timely manner

Can work against customization

Most CT is short-term, quick turn around & not for credit

Employers either don’t care or worry workers will leave if get a credentail

Single Employer /Consortia ProjectsSingle employer ConsortiaMost feasible for recruitmentMore effective in improving

trng functions & increasing employer investment

Training more likely to continue with employer funding

More positive business performance impacts

Important to deliver training for intact groups of workers to achieve improved product quality, reduced error rates, internal communication, etc.

Economies of scale: Reduces training cost for

small employersAggregates demand for

providers & less admin. costPotential business

competitiveness benefitsNeed intermediary to

manageDanger of becoming too

genericWorkers skills at start &

employer expectations for must match

TensionsEmployer focus >-< Worker focusEmployer interest & commitment>-< Longer-

term & basic skills training, credit & credentials

Economies of scale >-< CustomizationBusiness attraction >-< Community benefitsIntegration of basic skills & special

populations>-< Set-asides

Discussion questionsWhat strategies have worked best in your

state?What balance between meeting worker &

employer needs is achievable in your state’s ED context?

Have all of the necessary dots been connected to better serve low-skill, low-income populations?

Where do we go from here?