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Policy Framework
Nationwide, the labor market-driven growth of the low-wage workforce has become a major issue for both the business community and the general public. Low-wage workers represent a significant segment of the nation’s workforce: According to the Bureau of Labor Statistics, a quarter of the nation’s labor force earns $9.75 or less per hour. From both employers’ and employees’ perspectives, the rate of job loss and job turnover among low-wage workers — and the associated personal, family, and business costs — are high. At the same time, the rate of advancement of low-wage workers into better-paying jobs is low, and many of those who “play by the rules” — by working full-time, year-round — cannot support a family.
In response to this trend, federal and state governments have established policies and harnessed public resources in two ways:
- New (Though Limited) Retention and Advancement Services. Some public agencies and businesses have put job retention and advancement programs in place for low-wage workers. These programs tend to be located in sectors experiencing major job growth, such as health care, hospitality, and retail trade. They aim to reduce job turnover through early intervention with employees and supervisors when problems arise and to increase job advancement through skills training and on-the-job training. However, there are very few such programs, and they tend to be relatively selective, small, untested, and in an early stage of development — particularly those operated by public agencies. Indeed, most public workforce development programs offer no — or only very limited — advancement services to low-wage, incumbent workers and their employers.
- Financial Work Supports. Since the 1960s, the federal government and some states have created or raised the value of financial “work supports” that can improve the income of low-wage workers and their families by as much as 30 percent or more. Key among these are taxed-based income supplements — the Earned Income Tax Credit and Child Tax Credit — and public agency-administered work incentives, particularly child care subsidies, food stamps, and health insurance. Credible research shows that income supplements tied to work can increase employment, earnings, and retention, as well as improve educational outcomes and behavior of younger children. However, for a variety of reasons, including administrative obstacles, the rate of “take up” of public agency-administered work supports — that is, the proportion of eligible low-wage workers who receive any one of the work supports — is often below 50 percent. And according to one recent study, the take-up rate for the full package of available work supports is estimated to be as low as 5 percent.
One portion of the low-wage worker population that has the potential to move up in the labor market, and to fulfill employer needs, consists of reemployed “dislocated workers” — those who have lost well-paying (but often not highly-skilled) jobs due to economic restructuring, as in the automobile industry. The new jobs of many of these workers pay wages that are below — often well below — the wages of their previous jobs. Although all states receive federal funding for dislocated worker employment and training services, these services typically end after recipients have been placed in new jobs. There are few programs in place to work with such individuals after reemployment to help them advance in their careers and regain their previous income levels.
Agenda, Scope, and Goals
The National Work Advancement and Support Center (WASC) Demonstration is intended to build the capacity of the workforce and welfare systems to provide employment retention and advancement services, and the full package of financial work supports, to low-wage workers and low-income, reemployed dislocated workers. Sites in the demonstration have created WASC units of colocated workforce and welfare staff, who are housed in One-Stop Career Centers created by the Workforce Investment Act of 1998. They have also simplified the application procedures for financial work supports and are making it easier for working people to gain access to them. In addition to these innovations, the sites are building new linkages with employers in order to develop and deliver career advancement services — and work supports — directly at the work site.
MDRC, which is providing the sites with technical assistance to help them build strong programs, will also conduct a rigorous evaluation to assess WASC program operations and the impact of program services on job retention, wage progression and career advancement, and family income and poverty. This knowledge-development agenda, together with the institutional change in the workforce and welfare systems, is the key motivating force behind the support that the U.S. Departments of Labor and Health and Human Services, and the Ford, Rockefeller, and Robert Wood Johnson foundations are providing to MDRC for this project.
Design, Sites, and Data Sources
The decision to build the demonstration within the One-Stop system, rather than in welfare or other agencies, was based in part on the view that retention and advancement services should become an integral part of the workforce system. It also recognized that now, unlike a decade ago, far more people who are eligible for work supports are employed and have no relationship to the welfare system — but many work supports are still administered through welfare agencies. This led to agreement that the One-Stop system is the most promising institution in which to locate (and build) both job retention and advancement services and access to work supports for low-wage workers.
In each of the three full demonstration sites, Workforce Investment Act staff, focused on retention and advancement services, are working closely with welfare staff, who have been relocated into a single unit and who will administer work supports for WASC participants. At these sites, between 700 and 1,200 eligible workers will be randomly assigned either to the program group (50 percent) or the control group (50 percent). Those in the control group will continue to be eligible for any existing services that they were previously eligible to receive at the One-Stop and elsewhere (but not for the services provided by the new WASC unit). The WASC retention and advancement services aim to move low-wage and employed dislocated workers into better-paying jobs; to help employers to reduce job turnover and related costs and to have trained employees for second- and third-level job openings; and to simplify access to work supports through the One-Stops. The Department of Agriculture’s Food and Nutrition Service has provided a waiver to two demonstration sites, to encourage states and localities to experiment with simplification of the food stamp program rules (and the research will measure the effects of this simplification).
In early 2005, Montgomery County (Dayton), OH, and San Diego County (Chula Vista), CA, launched pilot WASC services. Full implementation began in fall 2005. A third site, Bridgeport, CT, launched its program in spring of 2006. In addition, a fourth site in Tarrant County (Fort Worth) has been selected for an implementation study because it offers the promising innovation of delivering WASC services entirely at employee work sites, with the cooperation of participating employers.
The research has two main components: (1) an implementation analysis to assess how the sites operate the program in the “real world,” adapting it to their differing local circumstances, and (2) an impact analysis of the program’s effects on participants’ labor market outcomes and income, based on a random assignment research design. Data sources for the study will include individual participant background and follow-up surveys; administrative records on earnings and work supports; interviews and focus groups with WASC staff, participants, and their employers; case file reviews; and program observations.
Together, the implementation and impact research strands will allow the study to answer such questions as: Can the WASC approach be operated on a large scale and in diverse localities? Does it increase participants’ acquisition of the skills needed in high-demand occupations? Does it reduce participants’ job turnover and increase their employment retention? Does it enable participants to find better-paying jobs with advancement opportunities? Does it increase low-income workers’ receipt of financial work supports? And does it enable workers receiving work supports to advance to better-paying positions that make those supports unnecessary? What is the potential role of employers in connecting their entry-level and lower-wage workers to work supports and skill-building opportunities?
The first major report from the project describes the rationale behind the program intervention, the program’s goals and strategies, and the early planning challenges encountered, and choices made, by the first two sites selected for the demonstration — Dayton and San Diego. The second report explores how WASC career coaches help low-wage workers understand the complex interactions between earnings and eligibility for work support programs and guide them to make the best advancement decisions possible.
What's Next
The timeframe for the project proceeds as follows:
- October 2005 – March 2008: Intake of WASC enrollees and control group members within each of the WASC research sites. Retention and advancement services will then last 15 to 24 months per individual, and work supports receipt may last for three years.
- July 2007 – December 2010: Research follow-up on participants’ outcomes. A report describing early impacts from the WASC sites, along with the implementation experiences in the sites, will be completed in late 2008. A separate implementation report will focus on the Fort Worth site’s experience in delivering WASC services at employer locations. Subsequent reports will update impact findings and estimate the program’s impacts for participants in all key subgroups.
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