This is one in a series of 15 two-page, evidence-based framing memos on pressing education and social issues prepared by MDRC for the incoming Obama Administration and the new Congress.

Bottom Line

With national unemployment at 6.5 percent and rising, income stagnating or dropping for nearly all workers but most acutely for low-wage workers, and increasing numbers of industrial workers being displaced by globalization and unable to secure better jobs due to a lack of investment in training, policy attention is turning to ways to upgrade the nation’s employment and training system. For nearly 30 years, the federal government has supported a multi-billion-dollar, state-administered, locally-operated workforce development system for adults and dislocated workers, currently authorized under the Workforce Investment Act (WIA) of 1998.[1] It is widely acknowledged that the WIA system suffers from underinvestment in both programs and in research that identifies truly effective strategies to meet the challenges faced by unemployed adults and displaced workers, as well as currently-employed low-wage workers. In addition, the system has not yet integrated into its services for working families existing financial supports, such as the Earned Income Tax Credit (EITC) and child care subsidies, that can improve employment prospects and family income. Since WIA is now on the docket for reauthorization, 2009 offers a prime opportunity to craft a comprehensive policy response to update the system and address its shortcomings.

What Do We Know?

• Between 2000 and 2008, WIA funding fell in real terms by nearly 30 percent for adult programs and by over 25 percent for dislocated worker programs.
  
  
• The WIA system has focused nearly exclusively on assisting the unemployed — including dislocated workers — find work. It has yet to develop programs to advance low-wage workers whose earnings have fallen during this period and who represent nearly half of the nation’s workforce, nor has it focused on how to connect these workers to financial work supports.
  
  
• The sole rigorous study of mainstream adult training programs, conducted in the 1980s and early 1990s, showed that, on average, they yielded modest earnings increases for adult men and women, but no rigorous research has been aimed at identifying effective mainstream program strategies to move adult women and men into better jobs.
  
  
• There has never been a rigorous study of mainstream dislocated worker programs to identify the most effective strategies to retrain those who have lost their jobs due to globalization.

What’s Next?

Adopt workforce policies (a) that promote services to low-wage workers, such as providing workers with financial incentives for skills upgrading and offering training programs to improve pre-employment and work skills, provided either at the work site or during non-work hours and (b) that provide employers with incentives to make these investments in skills upgrading of their workers.

Immediately invest in a major rigorous research effort to identify the most promising strategies to move unemployed adults and dislocated workers into higher-level jobs and to achieve advancement for low-wage workers.

Key References

Holzer, Harry. 2008. Workforce Development as an Antipoverty Strategy: What Do We Know? What Should We Do? Washington, DC: Urban Institute.

Smith, Pamela W., Gerald Mayer, and Rebecca R. Skinner. 2007. CRS Report for Congress: Labor, Health and Human Services, and Education: FY2008 Appropriations. Washington, DC: Congressional Research Service.

Wallace, John. 2007. A Vision for the Future of the Workforce Investment System. New York: MDRC.