According to findings from a new study, jobs seekers in the United States could realize potential net benefits over 20 years of approximately $41,000 per eligible person if local workforce training agencies implemented training programs that combine higher, more flexible individual limits for expenditures on state-approved training with support from training counselors. The study, conducted by Mathematica and funded by the U.S. Department of Labor, Employment and Training Administration, is the first long-term evaluation of the relative effects of alternative training models used under the Workforce Investment Act. It examines three models for delivering workforce training services through locally provided individual training accounts (ITAs): Guided Choice, Structured Choice, and Maximum Choice. The study shows that moving away from the status quo to provide more flexible, higher-value training awards, as provided in the Structured Choice model, is cost effective and has large, positive impacts on the long-term earnings of ITA job seekers.
Most workforce agencies currently use an approach similar to the Guided Choice model tested in the study, and it can be considered the status quo. Under this model, all job seekers were limited to the same capped ITA and were required to participate in counseling to help guide their training decisions. On average, the workforce agencies capped the ITA under this model at $3,500, and the average ITA amount awarded was $2,861. The third model tested, Maximum Choice, required no counseling after eligibility for training was established and also provided an ITA cap amount of $3,500 (average award was $2,888 per customer). Although those who participated in a Maximum Choice program were more likely to receive training overall, the model had no statistically significant impact on long-term earnings, compared with the Guided Choice model.
The evidence suggests that providing more training funds with counseling produces significant long-term net benefits to individual job seekers, the government, and to society as a whole. Thus, moving to a Structured Choice model—one offering a more generous cap (in the study, the average ITA cap under Structured Choice was $7,625 and the average award under this model was $4,625 per job seeker), tailoring awards to the individual needs of the ITA job seeker, and providing support from training counselors—would be more effective than the status quo (Guided Choice).
Key findings from the study include:
- Switching to larger, more flexible ITA training awards with counseling could generate $46,600 per ITA job seeker in net social benefits, driven by large, sustained increases in earnings.
- Individual ITA job seekers who receive larger, more flexible training awards and counseling could earn an additional $41,000 through retirement age.
- The government could save $5,000 per ITA job seeker by switching to higher-value, more flexible ITA awards, as a result of increased tax payments.
- Compared to the status quo, ITA job seekers selected training that was better matched to jobs within their chosen occupation under a Structured Choice model which provided greater training funds with counseling. The study’s findings demonstrate that this model makes ITA job seekers more likely to complete training, to earn a credential or degree in the field of training, and to be employed in the occupation in which they trained.
Irma Perez-Johnson, a senior researcher with Mathematica Policy Research who directed the study, said, “Few studies of employment policies have revealed net benefits of such magnitude. The findings demonstrate that increased investment in training, and flexibility in how those funds are applied on an individual level, coupled with availability of counseling support, can have significant positive impacts on long-term employment and earnings.”
ITAs were integrated into the practices of local workforce agencies following the passage of WIA in 1998 and were intended to facilitate training of customers to build new, or to enhance, existing skills, thus increasing employment and earnings. Under WIA, job seekers who need training can go to a One-Stop Career Center and receive a voucher that can be used to pay for training from a wide variety of state-approved training programs and providers. This voucher is referred to as an ITA. Local workforce development agencies have discretion in structuring and managing the ITAs, including the value of the vouchers and the extent to which job seekers receive guidance on how they use them. Findings from the Mathematica study can provide an evidence base for policy decisions on the most effective structure of this program. Study fact sheet.
About Mathematica: Mathematica Policy Research seeks to improve public well-being by conducting studies and assisting clients with program evaluation and policy research, survey design and data collection, research assessment and interpretation, and program performance/data management. Its clients include foundations, federal and state governments, and private-sector and international organizations. The employee-owned company, with offices in Princeton, NJ; Ann Arbor, MI; Cambridge, MA; Chicago, IL; Oakland, CA; and Washington, DC; has conducted some of the most important studies of labor, education, health care, international, disability, family support, employment, nutrition, and early childhood policies and programs.