Institute for Policy Studies Johns Hopkins University Best Practices in Promoting Public Sector-Employer Training Partnerships Burt S. Barnow Institute for Policy Studies Johns Hopkins University Prepared for the conference Enhancing the Role of Employer-Led Training In the United States, co-sponsored by the U.S. Department of Labor and the Urban Institute, and held on June 25, 2003 in Washington, DC.

Topics Covered Introduction On-the-job training Customized training Sectoral approach to training H-1B training programs Conclusions and lessons learned

Introduction Government training programs have been used since the 1960s Programs originally relied on a “Field of Dreams” approach: if you train them, employers will come Over time, the system has come to recognize the importance of training workers to meet employer needs For both JTPA and WIA states and local programs have boards with private sector majorities This presentation focuses only on programs for adults and excludes a discussion of the local workforce investment boards

On-the-Job Training OJT is used to provide informal training to qualified newly hired workers Employers receive subsidy for fixed period of time to pay for extra costs of training OJT is attractive because it reduces costs and risk to employer Studies consistently find high outcomes and impacts

On-the-Job Training (continued) Caveats: No experimental evidence on impact of OJT Establishing OJT slots can be expensive OJT can be abused: wage subsidy and/or overcompensation Bottom line: Good strategy, that should be encouraged but monitored

Customized Training Customized training includes Employer input and approval authority for the curriculum Employer authority to establish eligibility criteria for participants and to select participants if they desire A commitment by the employer to hire successful program completers

Features of Customized Training Companies heavily involved in curriculum development Recruiting, screening, and assessing potential trainees was a shared responsibility between the firm and the vendor Sometimes firm set the standards and in other cases the firm was actively involved in selecting each participant Training was tailored to jobs and customized for the employer The programs used a combination of classroom training and laboratory, hands-on training

Features of Customized Training (continued) Participants were assessed for adequate reading and math skills When needed, basic skills training was provided for participants slightly below the required reading or math level for the job Most programs included pre-employment and workplace skills Most companies provided written or oral commitment to hire successful program completers

Results from Case Studies No formal impact evaluations Over 80% completed training in all programs and over 90% in most programs Virtually all completers were hired by firm Costs ranged from $900-$2,700, with average of $2,000 Characterized as “win-win-win” for participants, employers, and programs Why not used more: High start-up costs to recruit employers Hard to finance curriculum development Numbers needed often small Wary of working with government

Results from Survey of State Programs 45 states had programs as of 1999 Duscha and Graves estimate 60% of funds for incumbent workers In 33 states firms select vendors In 12 states firms must use community colleges Biggest problem identified: Windfalls for firms Programs of limited scale and difficult to expand

Sectoral Training Programs Strategy of using intermediaries to focus on one or two industrial sectors of local economy Dresser and Rogers say 3 benefits: Economies of scale Economies of scope Network externalities Find promising developments in Milwaukee

Elliott and King Case Studies of 13 Sectoral Programs Strategies used: Restructuring jobs for higher pay for more skilled work Making participating employers into “yardstick” companies that are recognized for their leadership Rewarding exemplary employers through recognition Removing artificial barriers to employment, such as irrelevant qualifications Improving curricula in community colleges

Elliott and King Case Studies of 13 Sectoral Programs (continued) Specific interventions: Vocational training Business development activities Organizing workers and/or community residents Research and policy analysis

Promising Practices from H-1B Training Programs Requiring employers to contribute to the match requirement Use of employer association to screen applicants Requirement that employers submit written application for trainees Streamlined contracts and paperwork for employer-based training Requiring participants to remain on the job for two years Tailored training for incumbent workers

Conclusions OJT is a proven strategy that should be continued Customized training appears beneficial to all Sectoral approach is promising These strategies all have pitfalls, so care must be taken to overcome high costs and avoid corporate welfare and other abuses

Other Strategies to Consider Ensure that One-Stop Career Centers provide more than a common address for workforce development programs: coordinate employer contacts among One-Stop partners Treat employers more like a business would treat its customers Do not let the use of Individual Training Accounts undermine the importance of linkages to employers Develop linkages to registered apprenticeship programs and help promote the use of apprenticeship in the local area.

Other Strategies to Consider (continued) Link workforce development programs with economic development programs and have the programs jointly work with employers Make appropriate use of employer organizations, such as the Chamber of Commerce and trade associations Promote active involvement by employers on local boards