Labor Topics

• Measuring Program Performance
• Finding Out What Works
• Using Vouchers to Deliver Services
• Helping Service Members
• Self-Employment as an Alternative Strategy
• Moving Young People into Productive Careers
• Encouraging Employment for Ex-Offenders
• Addressing Unique Problems of Experienced Workers
• Assisting DOL and Grantees
• Clients

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Individual Training Accounts: Empowering Customers

The 1998 Workforce Investment Act (WIA) substantially changed the provision of employment and training services. One of WIA’s key objectives was to empower customers to make their own decisions about training, while providing appropriate information and support. Under WIA, instead of program staff deciding what type of training customers should get, customers receive individual training accounts (ITAs)—vouchers that they can use to pay for any training program, as long as it is on a state list of eligible providers.

The U.S. Department of Labor (DOL) sponsored an experimental study to provide policymakers with information on the effectiveness of different approaches to managing ITAs. The experiment randomly assigned customers eligible for ITA training to three approaches that Mathematica designed, based on a study of sites that had previously operated training voucher programs. The approaches differed along three dimensions—how much counseling was provided and whether it was mandatory, whether counselors could reject customers’ choices of training programs, and whether the amount of the ITA was fixed or determined by the counselor on the basis of customer needs.

The three approaches were as follows:

1. Structured Customer Choice. Counselors played a central role in directing customers to training programs likely to yield a high return. Counselors could reject training choices and customized the amount of the ITA to the needs of each customer.

2. Guided Customer Choice. Customers were required to participate in some counseling but made the final decisions about training choices. Choices were constrained by an ITA with a fixed value, which was the same for all customers in a specific site.

3. Maximum Customer Choice. Customers were not required to participate in any counseling and made the final decisions about training. Choices were constrained by an ITA with a fixed value, which was the same for all customers in a specific site and the same as the fixed value under the guided customer choice approach.

Mathematica and its subcontractors, Social Policy Research Associates and Decision Information Resources, Inc., assisted eight sites in implementing the three approaches and then conducted an evaluation of each approach. Between January 2002 and March 2004, all customers eligible for training within a site were randomly assigned to one of the three approaches. In total, 7,920 customers were randomly assigned.

Mathematica collected a considerable amount of data on the implementation of the three approaches and customers’ behavior. Researchers interviewed administrators and counselors during three rounds of in-person visits in each site. A study-specific information system tracked the amount of counseling received, the size of the ITA issued, and customers’ choice of training program and provider. Quarterly earnings and unemployment benefit records for all randomly assigned customers were collected from each state involved in the experiment over the five quarters after random assignment. In addition, 4,800 randomly selected ITA study participants were interviewed by telephone at 15 months after random assignment.

Findings

Our study found that, while the structured and guided choice approaches were generally implemented as planned, the maximum choice approach was not. Counselors were reluctant to be directive in their counseling. They tended to defer to customer preferences, failed to steer customers to high-return training, and rarely, if ever, denied training to customers. Furthermore, they did not constrain expenditures.

The approach to managing ITAs affected customers’ receipt of counseling and ITAs. While customers under the structured and guided choice approaches were required to receive counseling, customers under the maximum choice approach were not and in practice rarely requested it. Only 4 percent of customers under the maximum choice approach requested any further counseling after being found eligible for training. The take-up rate for ITAs was also significantly higher for customers under the maximum choice approach—66 percent under this approach received an ITA, compared with only 58 and 59 percent under the structured and guided choice approaches. On average, customers under the structured approach chose more expensive training programs and received a higher ITA than customers under the guided and maximum choice approaches.

Despite the effects an approach had on customers’ receipt of ITAs, approach had no effect on the rate of participation in training. About two-thirds of customers under each approach participated in training at some point during the 15-month follow-up period. Customers under the structured and guided choice approaches were more likely than customers under the maximum choice approach to use sources other than ITAs to pay for their training. The reduced counseling requirements under the maximum choice approach led customers to enter training sooner; these customers were more likely than others to choose a training program at a community college than at another type of training provider.

The approach also had little effect on employment rates or earnings over the 15-month follow-up period. According to the survey data, about 80 percent of customers in all three approaches were employed at some point during the 15-month follow-up period. They worked an average of 30 weeks and earned approximately $16,000 in the 15 months after random assignment.

Customers were interviewed just 15 months after random assignment, and many were still in training at that time. As a result, DOL extended the evaluation to include a second follow-up survey of ITA study participants and collect further employment and earnings administrative data. Findings from the extended evaluation will be available in late 2010.

Publications

“Managing Customers’ Training Choices: Findings from the Individual Training Account Experiment" Appendices (December 2006)
"An Evaluation of the Individual Training Account/Eligible Training Provider Demonstration" (May 2005) Executive Summary
"The Effects of Customer Choice: First Findings from the Individual Training Account Experiment" (December 2004)