use of market mechanisms in u s workforce programs lessons for wia and the european social fund n.
Skip this Video
Download Presentation
Use of Market Mechanisms in U.S. Workforce Programs: Lessons for WIA and the European Social Fund

Loading in 2 Seconds...

play fullscreen
1 / 19

Use of Market Mechanisms in U.S. Workforce Programs: Lessons for WIA and the European Social Fund - PowerPoint PPT Presentation

  • Uploaded on

Use of Market Mechanisms in U.S. Workforce Programs: Lessons for WIA and the European Social Fund. Christopher T. King University of Texas at Austin Burt S. Barnow Johns Hopkins University What the European Social Fund Can Learn from the WIA Experience Conference Washington, D.C.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about 'Use of Market Mechanisms in U.S. Workforce Programs: Lessons for WIA and the European Social Fund' - asabi

Download Now An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
use of market mechanisms in u s workforce programs lessons for wia and the european social fund

Use of Market Mechanisms in U.S. Workforce Programs: Lessons for WIAand the European Social Fund

Christopher T. King

University of Texas at Austin

Burt S. Barnow

Johns Hopkins University

What the European Social Fund Can Learn from the WIA Experience Conference

Washington, D.C.

November 7, 2009

  • Background
  • The 8-State WIA Study
  • Key Market Mechanisms Findings
  • Conclusions
  • Recommendations

Major changes authorized under WIA of 1998:

  • Fostering more coordinated, longer-term planning for workforce programs
  • Institutionalizing One-Stop Career Centers as the cornerstones of the local workforce delivery system
  • Sequencing job seekers’ services from core to intensive to training services
  • Implementing universal eligibility for core services via One-Stop Career Centers
  • Increasing reliance on market mechanisms

Last set of changes, market mechanisms, is the main focus of this paper.

Background …

WIA built upon more than a decade of state experimentation with some of these elements. For example,

  • WI, PA, TX & others with One-stop Centers in the late 1980s and early to mid 1990s
  • MI with its emphasis on empowering customer choice starting in the 1980s
  • FL, MI, OR, TX, UT & WA developing more comprehensive workforce systems, often with systems performance measures and management approaches to accompany them
the wia study
The WIA Study
  • USDOL/ETA-funded
  • Conducted 2002-2005
  • Led by Richard Nathan of the Rockefeller Institute of Government, with Johns Hopkins University’s IPS and the University of Texas at Austin’s RMC, and colleagues at other universities
  • Purposive selection considered region, urban/rural and organizational approach, emphasizing “leading-edge” states
  • Sites: 8 states, 16 local areas, 30+ One-Stop Centers
wia study sites
WIA Study Sites

Florida—First Coast (Region 8); Citrus, Levy & Marion Counties (Region 10)

Indiana—Ft. Wayne; Indianapolis/Marion County

Maryland—Baltimore City; Frederick County

Michigan—Lansing (Capital Area); Traverse City (NW)

Missouri—Kansas City area; Central Region

Oregon—Marion, Polk & Yamhill Counties (Region 3); The Oregon CSRT/Workforce Alliance

Texas—Austin (Capital Area); Houston (Gulf Coast)

Utah—Salt Lake City (Central); Moab/Price (SE)

wia market mechanisms
WIA Market Mechanisms

Four main mechanisms of interest:

Labor Market Information (LMI)—Promoting and facilitating better labor market choices and operations for employers and jobseekers

Eligible Training Provider (ETP) Certification—States establish ETP criteria and procedures to determine and maintain lists of ETPs jobseekers select from

Individual Training Accounts (ITAs)—Voucher-like accounts used to finance training for jobseekers

Performance Standards/Incentives—New version of performance management with standards and incentives for workforce programs, including state-level ones

key findings lmi
Key Findings: LMI

Minimal LMI emphasis in the WIA study:

  • All states have LMI units, largely BLS funded, producing current and projected data (e.g., employment by occupation, industry, wages).
  • States have greatly improved LMI quality, tools and presentation.
  • Some local WIB complaints/concerns about needing more detailed job vacancy data than was available.
  • O*NET occupational and related data improving and likely to be even better in the future.

A number of LMI shortcomings can only be addressed with added funding, support and development over time.

key findings etp certification
Key Findings: ETP Certification

ETP new in US workforce programs. Big shift toward a market-like system. States establish and maintain ETP systems, based on extensive provider outcomes reporting for all enrollees in all occupational training programs, not just WIA. Provider eligibility reviewed every 12-18 mos.

  • Experience among states varied. A few found ETP useful and minimally burdensome (e.g., FL, UT, OR). Others had initial and/or continuing problems (e.g., TX, MD, MI, MO).
  • Concerns about ETP implementation discouraged community colleges from providing training for WIA.
  • Questions raised about whether, as implemented, ETP provided sufficiently valid information to justify its costs and inconvenience.
key findings itas
Key Findings: ITAs

Another new market-oriented shift under WIA. ITA exceptions include OJT, customized training and special populations. Only limited prior experience with vouchers and voucher-like approaches.

  • Evidence on effectiveness of vouchers for disadvantaged, low-literacy populations mixed to date.
  • Provider — esp. community and technical colleges — uncertainty over filling classes and maintaining capacity consistently with ITAs.
  • ITAs somewhat successful to date. They are popular with participants and accepted by WIBs, who are mainly using a ‘guided-choice’ approach.
key findings itas1
Key Findings: ITAs …
  • States often left ITA implementation decisions (e.g., training time, cost limits) to the local WIBs, which usually used a guided-choice approach.
  • ITA cost ceilings tended to become cost floorsin local areas.
  • Actual provider choice with ITAs tended to be limited either because providers opted not to join ETP list (e.g., MD) or due to low numbers of providers generally (e.g., UT).
  • States with the fewest problems implementing new WIA ITA provisions were those with prior experience (e.g., MI).
key findings performance standards incentives
Key Findings: Performance Standards & Incentives

Initially, 17 core performance measures established for adults, dislocated workers and older youth: entered employment rate, 6-month employment retention, earnings change and others, including customer satisfaction for employers and jobseekers. Other measures applied to younger youth.

WIA’s performance management system seen as a big step backwards from that under JTPA in major respects:

  • Lack of adjustment mechanisms to account for participant characteristics, local economic conditions
  • No real standards negotiations by federal ETA staff.
key findings performance standards incentives1
Key Findings: Performance Standards & Incentives …
  • Vague data definitions (e.g., entry, exit, services) and poorer data collection and reporting systems.
  • Too many federal performance measures — though half of states added measures either to gauge system performance or to support day-to-day program management.

Some boards responded by ‘gaming’ local program performance, timing participant exits to maximize reported outcomes and other activities.

Key developments since 2005 include better ETA guidance on negotiations and adjustments, the OMB “common measures”, the IPI effort to develop system measures (WA, FL, TX, OR) and others.


Market mechanisms play a far more important role and largely accepted system-wide. Practical and conceptual issues about their appropriateness, effectiveness:

  • LMI often incomplete, sometimes inaccurate; immediate outcomes poor proxies for impacts.
  • Information often imbalanced, asymmetric: sellers tend to know more than buyers.
  • Disadvantaged, low-literacy participants may not be well suited to taking full advantage of ITAs.
  • Use of ITAs under WIA minimal due to combined effect of de-emphasis on training, cumbersome ETP process and reduced WIA funding.
Conclusions …
  • States and localities have embraced newly devolved authority and responsibility for workforce development under WIA; system increasingly varied nationwide.
  • Current approach to measuring/managing performance under WIA doesn’t fit well with intergovernmental approach to US workforce policy as it’s evolved.
  • Market mechanisms under WIA appear to be working better than expected (e.g., ITAs, ETP), but could be the result of low demands placed on them.
recommendations for wia
Recommendations for WIA
  • WIA should improve and tighten data collection and reporting by states and local WIBs, systemwide.
  • WIA should fund, develop and foster use of LMI and related tools for use by WIBs, employers, participants and state planners.
  • WIA should do more to encourage/support provision of skills training in growth sectors, through ITAs or other means.
  • Congress should broaden ETP process beyond WIA.
  • Congress should establish a mechanism for carefully and comprehensively reviewing the “Common Measures.”
wia recommendations
WIA Recommendations …
  • WIA should explicitly provide for and support development of performance adjustment models or other less complex but effective approaches to ensure encouraging services to hard-to-serve groups.
  • WIA should provide for more systematic capacity building across the system to foster best practices and professional development, e.g., institutional grantees.
  • WIA should continue to support evaluations using random assignment in conjunction with research on less expensive, intrusive quasi- or non-experimental estimation.
recommendations for the european social fund
Recommendations for the European Social Fund

Detailed recommendations premature. Issues to consider include:

  • Context is all important. One-size-fits-all solutions using market mechanisms are unlikely to work well in Europe given its institutions and traditions.
  • Over-reliance on market mechanisms should be avoided unless/until LMI and outcomes data are more robust and its major customers have ready access and are able to use them effectively.

Contact Information

Christopher T. King, Director

Ray Marshall Center, LBJ School of Public Affairs

University of Texas at Austin


Burt S. Barnow, Associate Director for Research

Institute for Policy Studies

Johns Hopkins University