The CHIPS and Science Act of 2022 strongly encourages any applicant for federal funding in domestic semiconductor manufacturing to include sectoral partnerships. Research has shown that sector-strategy programs can increase the receipt of credentials valued in the labor market, which can lead to increased earnings for participants. How can cities, counties, and states, in partnership with local employers, make sure their sector strategies are working well for everyone?
MDRC has conducted nearly 15 years of research on how to make sector strategies work. This paper presents recommendations drawn from evidence that employers and local governments can put into action to implement sector strategies well, promote economic mobility, and increase participants’ employability and earnings. In particular, these recommendations can help policymakers and practitioners develop high-quality programs to assist unemployed people in obtaining the skills and support they need to work in high-wage, high-growth sectors of the labor market in their regions.
What Are Sector Programs?
Sector programs train people for high-quality jobs in industries that have strong local demand and offer the opportunity for career advancement. Most programs offer similar services: job-readiness training (including professional skills development), occupational skills training, and support services. The programs also assist with job searches and job placement, and some continue to work with participants after they find jobs. Perhaps the most valuable component of sector programs is the occupational skills training they offer that in most cases leads to an industry-recognized or locally recognized credential or certification.
Sector-based programs grew out of earlier research efforts that suggested that general training, not tied to a specific sector, was not effective. The first big study of training tied to a specific sector was released in 2010. Evaluations of several sector programs have now found large, lasting impacts on participants’ earnings. These strategies have been codified in the federal context since the Workforce Innovation and Opportunity Act passed in 2014, requiring states to implement these strategies as part of their workforce efforts. Over the past decade, the workforce-development field has increasingly adopted the sectoral approach to meet the needs of both job seekers and employers. Today, nearly all states have policies in place to advance local sectoral training partnerships.
What Is Known About the Effectiveness of Sector Programs?
Sector programs can improve both the educational and the economic outcomes of low-income adults trying to enter and advance in the labor market. To start, the programs have been shown to increase credential attainment, a critical early step toward obtaining a high-quality job in many growth industries.
Consider the example of Per Scholas, a nonprofit information technology (IT) training and employment services provider in the Bronx, New York. In MDRC’s evaluation of a larger sectoral model called WorkAdvance, Per Scholas’s program lasted 15 weeks and produced large impacts on both credential receipt and earnings: a 46 percent improvement in completion of IT training and receipt of an IT credential, and an average annual earnings bump of $6,000 that is sustained over time. Per Scholas has since expanded to more than 20 cities and several more occupational categories.
Another sector-focused program, called Year Up, provides six months of training followed by a six-month internship, as well as other forms of support including counseling and a weekly financial stipend. This program helps young people transition into jobs in both the IT and financial-operations fields. A study of this program found that young people were 21 percentage points more likely to work in these two sectors and saw an average earnings increase of 28 percent.
Project QUEST, a sector program for health careers, increased earnings for participants by more than $5,000 annually, nine years after enrollment, and appears to have had statistically significant earnings impacts as long as 11 years after people entered the study. This program, in San Antonio, Texas, serves people with low incomes who are not enrolled in any form of postsecondary education, and provides workforce training and other forms of support such as counseling, math and reading instruction, and income supplements to allow students to attend the program full time. Project QUEST focuses on training and job placements for higher-paying health careers, preparing participants for roles as nurses and health technicians.
What Do Effective Programs Look Like?
Targeting sectors and job types. Successful sector programs help place participants in target-sector jobs. However, helping people obtain any job in the targeted sector is not enough. Programs must focus on specific subsectors and occupations that offer quality jobs with high wages and benefits and that are attainable with the training and credentials that they can provide.
Compare, for example, different health-sector programs. Health care is a growth industry in nearly every region of the country. As noted in the previous section, Project QUEST’s focus on in-demand health careers pays off: Participants earn more money in the long term. Another evaluation, of Health Profession Opportunity Grants (HPOG), included programs providing health sector training and support services such as counseling to people with low incomes (for example, recipients of Temporary Assistance for Needy Families). HPOG offerings range from short-term training for entry-level positions as orderlies and attendants, to training courses for medical assisting and pharmacy tech credentials, to longer-term training courses for higher-wage jobs such as registered nurses. The study found that HPOG produced a 13 percentage point increase in credential attainment and an 11 percentage point increase in employment in the health sector. However, HPOG did not increase overall earnings, perhaps because most participants took short-term training that led to lower-wage jobs. The lesson across these studies is that value accrues most to participants in longer-term training for positions with higher earning potential.
Localities looking to boost domestic semiconductor manufacturing through the CHIPS Act should partner with workforce nonprofit organizations and providers to identify local employers that can advise them on occupations with current and future demand and on the specific skills that workers need. Then localities and workforce providers can identify what other entities, from community colleges to unions to the providers themselves, are best positioned to create and offer training closely matching the skills that open positions require. The partners can also develop a shared understanding of what roles are anticipated in the near future in fast-changing fields. Programs’ success in boosting participants’ earnings may depend on their ability to target fields with higher-paying jobs in a local area.
Providing nonoccupational support services. While direct occupational skills training in an appropriate field is perhaps the most important component of a successful sector strategy, another important component is providing additional support participants may need to stay in and benefit from a training program. Programs provide support in a range of forms, including gas or bus cards, tutoring, and referrals to organizations that can provide financial, mental health, or substance use support.
Sometimes, participants who have been out of formal education for many years or who come from educationally underserved communities need additional skill-building support to be able to stay in and complete the program. These participants may not have the foundational math and reading skills they need to take on their chosen career, or even to become eligible to enroll in their preferred sector program. Bridge programs and tutoring can help such people become eligible to participate by acquiring those skills. For example, Project QUEST, one of the successful programs mentioned above, provides intensive academic and career advising to participants to ensure they have the foundational skills they need before and during their training.
When programs serve students from families with low incomes, it can be very difficult for them to spend time in workforce training instead of working to support themselves and their dependents. Project QUEST covers the cost of training and also gives financial stipends, which reduces the barriers to program participation and completion. Generation Work in Cleveland combined funds from the Workforce Innovation and Opportunity Act and Temporary Assistance for Needy Families to connect young people with social services and employment services in the same center. One of MDRC’s new workforce studies, Google’s Career Certificates Initiative, will include living stipends as well, with a goal of assessing how they help potential participants with low incomes undertake retraining in the tech field.
The most effective training programs also make a point of providing specialized job-placement assistance to participants who might have been historically locked out of a field, such as women in construction and IT. This assistance might include job placements with a wider range of employers or networking events to help people broaden their professional networks, both complemented with training beforehand so that participants can make the most of their time in those activities.
Ensuring equitable access. All these forms of support serve the overall goal of filling labor market needs while also promoting equity. Labor market opportunities are not evenly distributed. Many people who could be successful in a given field do not have access to it. Addressing occupational segregation—that is, helping people enter their preferred fields when they might have historically been locked out of them due to race, gender, income of their family of origin, or some other factor—may improve economic development and equity alike.
In addition, acquiring 21st-century skills—general work habits and competencies such as communication and problem-solving skills—can be as beneficial to participants as job training. Such skills are transportable, are valued by all employers, and can help with career advancement. They also provide a disproportionate benefit to people entering new fields for the first time, such as people from families with low incomes who have never had white-collar job experience. The WorkAdvance model mentioned above included a career-readiness component, which included classes to teach participants about the sectors they were entering and help them acquire the résumé and the interview skills needed to be hired and the 21st-century skills critical to success in the sectors. Nearly all participants reported engaging in a least one career-readiness activity.
Offering job placement beyond the first job. Sector strategies should all include job-placement support when the formal occupational skills training concludes. Participants will benefit the most if the training they receive leads directly to a job. Many programs also continue to provide guidance beyond the first job, from emotional support in the first few weeks on a new job, to skills assessment to prevent or fix issues that might lead to job loss, to longer-term advice related to career advancement. For example, Per Scholas is developing alumni-advancement coaching services to help trainees achieve greater success in the IT field.
Committing to continual improvement. Finally, and most importantly, sector programs must cultivate and maintain close ties with employers in the area and engage in some form of continual improvement to ensure their programs are meeting their goals. Any continual improvement efforts should involve programs, municipalities, and employers collaborating to mutually reinforce the goals of training and job placement. This collaboration may look like direct job matching between participants and employers; for example, Per Scholas maintains strong relationships with large firms, leading staff members to identify good job matches and vouch for participants who do not have access to the fields through their social networks. This collaboration may also inform workforce development at a higher level: When programs, states, and industry partners are communicating regularly, they can better anticipate coming workforce needs in burgeoning industries or identify specific niches where additional training is needed, allowing programs to bolster their offerings and students to receive better training they will bring to the workplace. This flexibility will be especially important as the acceleration of automation, changes in remote and hybrid workplaces, and the aging of the population, among other factors, alter the labor market.
Continual improvement efforts should also include some form of tracking of graduates, whether it is informal, through surveys, or formal, through the acquisition of unemployment insurance data. These data will reveal whether the sector strategy is meeting its goal and whether participants are successfully entering and staying in well-paid jobs—a goal that all the partners share.
Bottom Line: Sector strategies can produce positive impacts on both education and earnings. But they must be implemented well to work. Sector strategies are a prime example of how policy choices can benefit local governments, employers, and workers alike. With the CHIPS Act providing funding to support sector partnerships, using the research evidence of “what works” can help ensure the offerings are robust and aligned with best practices.