How to make sure that workforce programs lead to better wages.
America's main pot of workforce dollars often doesn't lead to jobs that actually pay people a living wage. Here is a way for doing things better.
The issue.
Many people trained and hired out of America’s main source of workforce development funds end up in jobs with wages so low that they are functionally unemployed.
Wait, what?
For a long time, my explanation of the Workforce Innovation and Opportunity Act has been as follows: WIOA is meant to get workers to “job.” Not “a good job,” or “a job that fits your skills and life needs and what you want to do,” but “job.”1
What has that produced? Here is Joseph Fuller and Kerry McKittrick of Harvard University, writing for Work Shift:
Unfortunately, publicly-funded training programs often fail to meet this basic expectation. Research by our colleagues at the Project on Workforce found that over 40% of WIOA participants earn less than $25K annually after completing training programs, often in jobs that provide few opportunities for career advancement.
That particular salary level is notable. Here is Eugene Ludwig, writing recently for Politico Magazine:
If you filter the statistic to include as unemployed people who can’t find anything but part-time work or who make a poverty wage (roughly $25,000), the percentage is actually 23.7 percent. In other words, nearly one of every four workers is functionally unemployed in America today. . . .
Going to go out a limb here: It’s bad that nearly half of the people who get help from America’s main source of workforce development end up in jobs that pay so little the workers in them can be considered functionally unemployed.
The Harvard team2 argues that a key cause here is that too many providers look for quick solutions. I agree with that, but I also don’t think the problem is wholly on the training providers. Congress built WIOA to move bodies and paper. You can’t move as many people as possible through the system if you don’t get them to the exits as quickly as possible, and the system incentivizes providers finding people employment, not quality employment.
Or put another way: maybe we need to think about federal workforce programs as doing more than getting people to “job” as quickly as possible.
Much of my last job at the Department of Labor was to find ways to use the programs3 we had on hand to get more people into good jobs. (“Good jobs," to keep things simple, are those that pay enough for workers to do more than just get by and treat them well enough that they stay and grow in them.) I spent two years analyzing and thinking about better ways to use each dollar we spent.
Because of that work, I think there is a better way of attacking this issue that could be hardwired into many workforce programs—one that takes some work and risk and investment from funders, training providers, and employers. It’s not a perfect fit for every program, but in terms of what I learned from hours and hours of sorting what works, this is a pretty good approach.
Don’t train anyone for a job that is not available.
Incentivize employers to hire program graduates.
Don’t give employers any incentive from the program until they agree to employ people at a good wage and with good working conditions.
Explain yourself.
We already talked about the quick-fix phenomenon that I think plays a role in the low wages for many WIOA participants, but there also is another recurring challenge in American workforce development worth defining. It’s called “train and pray.”
To give you an example of what this looks like for the uninitiated: say the mine shuts down in a coal town in West Virginia or Ohio. One approach for using workforce dollars to help out-of-work miners would be to pick an occupation where there is a need for more skilled workers—let’s say making aluminum foil—and train them in it. In a train-and-pray scenario, there has been little to no verification that there actually is an employer in the area who is making aluminum foil. I have seen many instances where there very much isn’t a job, meaning the provider (and the government program that funded the project) wasted time and money on something that sounded interesting, but most likely got few, if any, people a new livelihood.
That’s why it’s important for funders and providers to be sure that a project trains for a job that actually exists. This sounds obvious, but it’s not always a guarantee under the current build of federal workforce laws, not to mention the pressures on government to get funding to the street and providers to use that funding as quickly as possible to train people. Having a clear, available job in mind also has a natural programmatic benefit: if you’re a worker, knowing there is a real job waiting for you at the end of a program is a natural incentive to show up and finish the program.
Which gets into the next logical question: once someone is trained for a job that is open, how do you make sure an employer actually will hire them?
Well, I don’t think we can rely upon either the goodness of their hearts or our own personal ideas of what makes good business sense. The latter was a point I heard many times from leaders during the first Trump Administration, particularly around their frustration with why there aren’t more apprenticeship programs. They pointed out apprenticeship was a clear solution to the workforce development problem that they were hearing from employers: finding workers trained to their specific needs who are likely to stick around for a while.
Well…
And “everything” includes the mix of knowledge gaps, biases, and lack of willingness an employer brings to a conversation about hiring graduates of a workforce program. The best business case in the world isn’t going to move some employers.
What can help with that? Incentives.
The form of the incentive is not so important to me as it moving the employer to make hires where they need to be moved. Maybe it’s just that they now have a dependable source of skilled talent. Maybe it’s that you’re covering half or even 75 percent of their on-the-job training costs, which WIOA can allow. Maybe you’re paying them for hitting performance benchmarks or providing them some other compensation. I’m agnostic so long as it gets people hired.
But I also don’t think it is a good investment of public resources if a program pays out an incentive without some indication that the hire is going to get paid a living wage. As I have written before, if someone ends up in a good job and a career, the less likely they will need public resources in the future. That is why before providing an incentive I would want something in writing that shows that a program graduate is going to get the kind of good pay and working conditions that lets them stick in a job.
A key clarification here: this doesn’t necessarily mean a contractual arrangement between the employer and the training provider or the funder—although as a lawyer, I have many warm but complicated feelings about that idea. A funder also can require that an applicant show some sort of proof, such as a commitment letter, that an employer is ready to hire workers into good jobs.4
Hey, can we actually do this now under WIOA?
With the caveat of consult your lawyer and WIOA isn’t just one program: my thought is yes, especially for on-the-job training reimbursement agreements. Would this be easier, though, with a new statute that sets out this vision? Of course.
I’ll also say that when I have raised this idea in the past, I have gotten one of two responses.
Wait, you mean we don’t do that?
What is wrong with you? We can’t do that.
Both are valid reactions. For one, WIOA isn’t one system or one program. By design, it’s several different programs crammed together and done more than 50 different ways. Information doesn’t flow through that type of system in any sort of predictable fashion. There is a good chance someone is doing this exact model right now.
For another, there are legitimate concerns as to how you would enforce the pieces of this approach for some programs. For example, I am reluctant to force an underfunded nonprofit to have to file suit and enforce an agreement with an employer.
There also is the fact that America only invests 1/7th of an emotional Twitter purchase (or a little less than four Quibis)5 into workforce development for the entire country. That cake has been cut many times before a grantee can calculate the crumb it can give an employer as an incentive to hire people. Oh, and Congress probably is about to give us far less cake.
All that said, I have seen grantees do this exact approach as a consequence of building the best possible program they could. And that ultimately is the point of all this: the best workforce programs set up workers—and each entity in the process—for the most success. They have clearly defined roles and infrastructure to ensure everybody benefits as much as possible.
Is this hard? Yes, but you get what you pay for and you get what you don’t pay for, too.
Most of what we’re paying for now is getting people to “job.” But putting time and effort and money in the right places could get them to “a good job” instead.
One place you could do this right now.
If I was in a position to where I could try to this idea, there is a non-WIOA grant out now that I think is actually a good fit:6 State Apprenticeship Expansion funding from the Department of Labor.
Three reasons why:
The grantees are states, who are arguably7 in a better position than an underfunded nonprofit to reach and enforce an agreement with an employer that conditions incentives on good jobs.
It is decently funded, with some states starting with an allotment of more than $1 million and room to get more through the competitive application process.
The funding opportunity explicitly allows grantees to pay out incentives and performance awards for a form of workforce development that, going back to the original Harvard problem, has strong wage progression built in by design.
If you try it out in your application or with your money, I would love to hear what you learn. Email me at nick@jobsthat.work.
Card subject to change
LATER THIS WEEK ($): I have a couple of pieces on the Administration that I am putting together for paid subscribers to better understand what is happening right now and how to prepare for what might be coming. I suspect you will see one of them before the end of the week, depending on what catches fire.
FRIDAY ($): New grant listings for paid subscribers, plus some insight into the Administration's attempts to use terms and conditions to freeze money.
NEXT TUESDAY: We’re talking about Registered Apprenticeship from the wrong angle.
Why not “a job”? Congress wanted to manage costs so they didn’t invest in an article before “job.”
I disagree with the Harvard researchers on their approach to solving this problem, which is holding training providers accountable for salary gains down the line. As you can gather from the above, I would prefer to spread out the risk and the work among funders, providers, and employers. Generally, providers have little control over whether an employer pays someone a better wage over time, and it becomes increasingly difficult to track wages the more time that passes after someone exits a WIOA program.
I also think that the researchers are too narrowly focused on career and wage progression. Both could be and should be better, yes, but I think the bigger issue is that starting wages are too low for graduates of WIOA programs. As the researchers note in their piece, wages are sticky. Based on my experience, if someone’s starting wage is bad, their progressed wage is going to be a slightly better version of bad.
To that point, if the money gets to do what it is supposed to do, I am excited to see the outcomes of those investments.
One, this is not just plausible, I have seen it.
Two, something I have heard on a great many things over the years is “No one will sign up for this.” And, well, I have yet to be part of a well-funded government grant competition that struggled to find applicants, and some of them had far more onerous and complicated approaches than what I discussed here.
Yes, employers could very well balk at this, but in an environment where government funding could be harder to come by, I struggle to believe that no employer would partner with a funder or grantee on this work to improve its hiring and offload some of its overhead costs.
Figures that I mention for no reason at all.
Which I offer for informational purposes only. I can’t guarantee that anyone who tries this will get funded.
State workforce agency leaders reading this: I said “arguably”!