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Workforce development is an American economic development approach that attempts to enhance a region's economic stability and prosperity by focusing on people rather than businesses. It is essentially a human resources strategy. Workforce development has evolved from a problem-focused approach, addressing issues such as low-skilled workers or the need for more employees in a particular industry, to a holistic approach considering participants' many barriers and the overall needs of the region. Today workforce development often is seen as a solution to issues of social equity. One example is New York's Workforce Development Institute (WDI) which sponsors programs for disadvantaged workers and funds the NYS Apollo Alliance to bring social activists, businesses, organized labor, and educators together to address energy and environmental justice concerns.
Workforce development has historically been found in two forms: place-based strategies that attempt to address the needs of people living in a particular neighborhood, or sector-based strategies that focus on matching workers' skills to needs in an industry already present in the region, such as healthcare or manufacturing. Some contemporary workforce development programs attempt to combine elements of both approaches, linking employment training with other government programs and community resources to provide wraparound services.
Across both approaches, themes for best practices have emerged. Successful workforce development programs typically have a strong network of ties in the community, and are equipped to respond to changes in their environments. Additionally, they take a holistic approach to the problems faced by participants. The effectiveness of these programs has been evaluated in various ways, including quantitative and qualitative techniques. Ideally, random assignment methods are used, although their utilization may be difficult in practice.
The responsibility for workforce development in the United States has rested on the government's shoulders for at least a century, since the advent of public schools. This formal system of education replaced earlier days in American history when students whose parents desired them to learn a trade other than their parents' were apprenticed. Informal schooling took place at home, depending on the household's ability and income level. Public schools were created to prepare students to earn a living wage by providing them with skills such as reading and arithmetic. However, an employer still typically provided vocational training on the job.
Traditional workforce development has been problem-focused. Economic development practitioners evaluated neighborhoods, cities, or states on the basis of perceived weaknesses in human resource capacity. However, recent efforts view workforce development in a more positive light. Economic developers use workforce development as a way to increase equity among inhabitants of a region. Inner-city residents may not have access to equal education opportunities, and workforce development programs can increase their skill level so they can compete with suburbanites for high-paying jobs.
Workforce development has also expanded beyond the notion of employment or vocational training. Workforce development today often takes a more holistic approach, addressing issues such as spatial mismatch or poor transportation to jobs. Programs to train workers are often part of a network of other human service or community opportunities.
The American Workforce Investment Act of 1998 (WIA) demonstrated growing importance of the workforce development concept in the political arena. The act created Workforce Investment Boards which brought workforce development to the forefront in states and localities across the United States while highlighting the importance of the community's involvement in developing workers' skills. The role of industry clusters is also considered in some contemporary workforce development programs. Note that industry clusters take an economic development approach to the economy as a whole, while sector-based workforce development considers only workers.
The types of partnerships workforce development programs employ has changed as well. In the 1990s, sector-based workforce development programs were most commonly found in nonprofit, community-based organizations, but today they are more likely to be tied to community colleges. Additionally, sector-based programs are now more likely to be paid for by government funding rather than private donations.
Researchers have categorized two approaches to workforce development, sector-based and place-based approaches. The sectoral advocate speaks for the demand side, emphasizing employer- or market-driven strategies, whereas the place-based practitioner is resolutely a believer in the virtue of the supply side: those low-income job seekers who need work and a pathway out of poverty. However, contemporary strategies often use a mixed approach.
Sector-based approaches consider the sectors, or industries, in a region that are in need of specific workplace skills. These strategies focus on the demand side of workplace development and consider the industries in which it is most likely that new employees will be hired. Sector-based programs may have higher entrance requirements than place-based strategies because their ultimate aim is to aid the sector at which they are targeted, not to increase the general hirability of the most disadvantaged residents.
Massachusetts has had a rich history of sector success in state-supported initiatives, led by Commonwealth Corporation a quasi-public entity, and was recognized by the National Governors Association as one of five leading states in the nation advancing the sector-based approach.
Sector-based strategies are designed to fit the needs of both industry employers and workers who want to improve their skills and advance their career development. By definition, sector-based approaches must target a specific industry. An initial assessment can reveal which industries would be good targets for a region, and assessments during the program can help refine the program's focus.
Appropriate strategies are typically created through networks and partnerships (between invested employers, unions, Workforce Investment Boards, one-stop career centers, adult basic education providers, community based organizations, community colleges and other institutions of higher education, or other training and service providers). These partnerships are designed to connect low-income or disadvantaged individuals with employment in jobs that offer the promise of financial stability and significant growth in the industry in the near future.
Community involvement is also an important component in building a sector-based strategy. Specifically, the involvement of an intermediary with deep knowledge of the industry is necessary. The intermediary can facilitate partnerships with employers, and help create solutions for both employers and potential employees. Employers will be encouraged to participate in activities such as developing curriculum, creating evaluation and assessment tools, and committing to job shadow programs.
Because the sector approach targets an entire sector, rather than a single company, a sector strategy often involves the government working side-by-side with industry leaders to help an entire sector become more competitive. Through such strategies for improving the employability and career path development for low-income, low-skilled workers, systemic change is created that benefits both employers and workers. Some government grants require a percentage of funding to come from private sources, which ensures that the community and targeted industry are invested in the program before it starts. Public sector financial support is often small so that private sector investments have to be leveraged.
Several potential barriers exist for employing sector-based workforce development strategies. First, in many regions a skills gap exists between what workers know and what employers need. Although demand might be high for a particular occupation, it may be unrealistic to train a low-skill population in the necessary skills.
Second, rapid change makes sector-based strategies difficult. Quick turnover in technology can make a training program obsolete in a few years.
Last, many potential workers in the United States demonstrate low literacy or educational levels. In some regions, workforce development programs will have to teach basic skills like reading as well as giving instruction in more specialized tasks.
Place-based approaches, which consider the supply side of the workplace (workers), are primarily focused on the characteristics of people in the region or community where the training program will be located. Place-based strategies often help participants gain initial access to the labor market while addressing other essential concerns to the region, such as housing development or English skills. In general, place-based approaches aim at training the unemployed workers and enhancing their skills for entering the labor market.
Place-based strategies have been criticized for their focus on finding jobs for participants quickly, rather than evaluating the quality of those jobs.
Stoll (2004) categorizes two main place-based approaches, the basic education approach and the work first approach. A 2009 review of welfare-to-work programs found that programs utilizing solely a work first approach tended to result in smaller costs for the government, but also produced smaller benefits for program participants, compared to programs which also supplement participants' earnings to encourage employment. On the other hand, programs with the goal of increasing participants' English skills did not appear to reduce costs for the government, nor did they increase participants' income. All approaches must tie efforts to conversations with local employers to determine which employers are currently hiring.
Autor (1998) states that the expansion of the knowledge-based economy in recent decades increased demand for labor in all sectors, but the skills required for these jobs also increased, leaving many low-income workers outside of the new job market. This is where place-based approaches come into play. For example, if a region is dominated by information technology (IT) industries, the job skill requirements will likely be higher than for other industries such as manufacturing, which may increase low-skill job seekers' difficulty in obtaining jobs. Building and strengthening the link between low-skill workers and available job opportunities has become a one of the largest issues for place-based approaches.
Community or neighborhood development can be achieved concurrently with place-based workforce development. William Julius Wilson (1998) indicated that place-based efforts seek to create community-level outcomes that represent a turnaround of the environments that perpetuate joblessness and concentrated poverty. Furthermore, Giloth (2000) stated,
As an example, the federally sponsored Jobs-Plus program heavily utilized place-based programs to create a “culture of work” in the Housing and Urban Development (HUD) housing units in which it was implemented. Some examples include signage in the apartment buildings and training on essential job skills like answering the phone. Jobs-Plus was found to have a significant, positive impact on increasing earnings, decreasing unemployment, and decreasing dependence on welfare.
In sum, place-based approaches help not only the unemployed or low-skill workers but also help businesses grow and may encourage new businesses to locate in the local community.
Place-based approaches have provided an ideal framework for state and local government to address the issue of unemployment and poverty problems in local communities or regions. A strong place-based effort will focus on the most pressing needs of local residents, such as physical or substance abuse or financial difficulties, along with providing employment training. The program may want to provide mentors who can connect participants to resources, rather undertaking the large financial burden of providing these services.
Additionally, Steuart (2003) proposes four key factors that she views as necessary in Australian place-based approaches: joined up structures, people, investment, and infrastructure. “Joined up structures” refers to the need for community and government collaboration to ensure successful implementation of a workforce development program. In some cases the program is funded by a local government, but instruction takes place at a nonprofit organization, for example. Second, the commitment of many community leaders is also desirable for the creation of a successful program. Third, financial investment in individuals may be a means to improve the equity of a neighborhood, a traditionally place-based concern. Last, infrastructure refers to items needed for a place-based strategy, such as physical buildings, social capital, and financial resources.
Some approaches now combine a focus on place with an evaluation of sectors that face a workforce or skill shortage. For example, Instituto del Progreso Latino in Chicago, Illinois focuses on the Latino population of the city (addressing a place-based need) but provides training in specific sectors, such as manufacturing and nursing. Per Scholas in Bronx, New York and Miami, Florida focuses on providing professional certification level training in computer hardware and network maintenance and repair, for members of underserved and low income communities.
Although workforce development strategies vary by whether they are focused on demands due to the location or from industries in the area, or both, common threads run through the success stories evaluated by economic developers thus far.
Prior to implementing a sector- or place-based approach, an analysis of the community's current and anticipated needs should be undertaken. One report details a sector analyis to determine the need for more healthcare workers in a particular community, for example.
Most program evaluations assess whether employees' salaries increased as a result of the program. Many also consider whether the participants were employed at a higher rate than prior to participating in the program. For example, an evaluation of a sector-based found that program participants had higher earnings and were more consistently employed over the course of the study than were non-program participants.
Another common indication is retention, or whether employees stay employed. This data can be difficult to collect.
Both sector and place-based strategies emphasize the importance of ties with the employers. Even in place-based strategies focused on finding work quickly must tie efforts to employers to determine who is hiring. These relationships should occur before the program is implemented to help shape a curriculum that responds to the employers’ needs.
In place-based programs, this may entail determining general skills that are lacking in a specific population such as English-speaking skills. For sector-based programs, skills will be much more specific. For example, Project QUEST created a brand-new certification program in response to employer needs.
Workforce development programs can be evaluated based on the strength and number of ties with community employers during the creation stage of the program, as well as their ongoing participation to constantly assess which skills are most needed. As Giloth’s (2000) assessment of the history and future of workforce development concluded, “Employer leadership is key to long-term reform” of workforce development systems.
Both place and sector based programs benefit from a strong network of ties to community nonprofits and other resources. Many programs have found community colleges to provide the needed support, but any “base in a strong community organization” is beneficial for a workforce development program. Nonprofit organizations have been found to be essential for successful sector-based programs, despite the programs' inherent focus on industry and employers.
Nowak (1997) believes community ties can be problematic when they are limited to the immediate neighborhood in which the program is located, however. He proposes that program developers must understand of the entire region’s economic trends and provide participants links to opportunities outside the neighborhood. Labor markets are not restricted by city or neighborhood boundaries as they once were, increasing the need for ties with nonprofits and other organizations beyond the scope of the neighborhood.
An adverse financial situation can be a huge detriment to workforce development program participants. There are a variety of ways to address these needs, but the important aspect appears to be that financial difficulties in particular are not ignored. Other individualized services such as childcare or help overcoming substance abuse are also an important component of workforce development.
A strong workforce development program will provide assistance in the areas most needed by program participants, most notably financial assistance. This does not necessarily mean the program provides finances; in some programs mentors helped workers find government or nonprofit sources.
Programs must be flexible, so that they can change when market or workforce conditions change. One marker of adaptability is the presence of mechanisms to listen to what the community saying, evidenced by the close ties with community stakeholders and nonprofits as explained above. However, this may be an issue of organizational culture as well.
Adaptability is closely tied to scale and sustainability. Giloth proposes that these attributes can be obtained by investing in the best practices of setting goals and keeping track of progress. Successful programs continually update their goals in response to information systems that relay the current situation of the job market and employers’ needs.
Organizational capacity is primarily concerned with a program's human resources (or staff size) and funding. Successful organizations possess the capacity for implementing large-scale programs deeply invested in the community’s culture and needs. Although programs certainly do not need to internally provide all support mechanisms such as childcare, they should have adequate organizational capacity to assist participants in finding the type of support they need. Furthermore, maintaining current, constant communication with employers and with nonprofits and other community organizations requires significant staff time. Successful programs are prepared for the amount of work it takes to implement a workforce development program.
Researchers have used multiple methods to determine whether workforce development programs are successful. Generally, researchers want answers to questions such as whether programs result in higher employment among participants, whether employment is long-term, and whether participants make higher wages than before they entered the program. Some methods are qualitative and some are quantitative.
Random assignment is often viewed as the most preferred method of evaluation. Researchers randomly assign individuals to participate in the program or not, eliminating bias resulting from individuals’ self-selection to participate. However, this method is often impractical in real situations, especially due to political implications of purposely keeping some individuals out of the program.
The Mott Foundation’s Sectoral Employment Impact Study, which commenced in 2003, was one of the first large-scale evaluations to use a random-assignment model. The study found significant impacts of sector-based workforce development strategies. Participants were more likely than non-participants to be employed and to have higher earnings.
Cost-benefit analysis compares the costs of implementing a program to the benefits accrued to stakeholders. A cost-benefit analysis can demonstrate whether a program saves money for the government due to lower welfare or social service needs, and whether a program will raise the average earnings of participants. Even if a program results in net costs to the government, if every dollar the government spends results in more than a dollar earned by program participants, it may be a worthwhile endeavor.
A limitation of cost benefit analyses is that some benefits and costs cannot be expressed in dollars. For example, the emotional stability that results from the security of a job is difficult to quantify. Although methods exist for monetizing factors like these, but some evaluators choose instead to focus only on factors that can be reliably measured.
Software solutions have been created to track efforts to outcomes where it pertains to workforce development.
A time series regression model takes data from multiple points of time and measures whether significant effects can be seen before and after a program was administered. If differences are strong enough, the regression line generated from this approach will change slope at the point at which the program took effect.
The comparative interrupted time-series analysis employed by Bloom in evaluating the Jobs-Plus program in public housing developments used a time-series regression that included multiple baselines. This method allowed the Jobs-Plus evaluation to pinpoint the effect of changes in a particular housing development that did not take place at other locations.
Lausch and Osterman’s 1998 evaluation of Project QUEST, a workforce development program in [[San Antonio, Texas]], suggests that cost-benefit analyses and random-assignment evaluation techniques are often not feasible choices for evaluating an existing program. They use a series of interviews to develop an understanding of the program’s strengths, a method used elsewhere in other case studies. Interview data can be quantitative as well as qualitative. Information from interviews can also be combined with another methodology to show a complete picture of a workforce development program.