The failure of vouchers in workforce training

This issue of The Job looks at a new analysis of the fragmented WIOA job training system and its 75K eligible programs, and a call to move away from voucher-style funding. Also, what information adult learners of color want on college programs.

This issue looks at a new analysis of the fragmented WIOA job training system and its 75K eligible programs, from Harvard’s Project on Workforce, which calls for a move away from voucher-style funding. Also, what information adult learners of color want on college programs.

An ‘Overwhelming Morass’

The federal government’s primary workforce training system is sprawling, underfunded, and bewildering to the jobseekers it’s designed to serve—with less than $500M spread each year across 75K eligible programs from 7K potential training providers and covering more than 700 occupational fields.

Those numbers are from a new analysis by Harvard University’s Project on Workforce of federal job training under the Workforce Innovation and Opportunity Act (WIOA). The researchers call for a reboot, with funding models that move beyond the current voucher-style approach of leaving it to low-income Americans to make sense of the job-training maze.

“I’m just baffled by why we do this voucher thing,” says Rachel Lipson, the founding director of the Project on Workforce who this month is moving to the U.S. Department of Commerce as a senior policy adviser in the CHIPS Program Office. Lipson co-authored the report with David Deming, Alexis Gable, and Arkādijs Zvaigzne.

WIOA is the key federal investment in short-term, job-focused training for adults. Yet the report notes that its training expenditures, which hit $429M in 2019, are a drop in the bucket compared to government spending on higher education, such as the roughly $25B spent on the Pell Grant program last year.

  • Just 220K people received the workforce training vouchers in 2019, the report estimates. And the average cost per training participant was only $1,854.
  • The average eligible provider enrolls just three WIOA-funded learners per year, with around $6K total in training revenue.

Despite the program’s smaller reach, it is “vast and hard to navigate,” the report says, with 75,442 different programs from colleges or other institutions on the preapproved lists each state must maintain under the law—the so-called eligible training provider lists. 

And making the case for more money is difficult when performance information on training programs and providers is limited at best. The funding also tends to go toward low-wage jobs, such as medical assistants or nursing assistants. The researchers estimate that 40% of WIOA training participants earn less than $25K a year.

“The net result is a highly fragmented system, where strong programs are not differentiated from weak ones, and where incentives for high-performing providers to participate in WIOA are limited,” the report says.

The public workforce system in the U.S. relies on older processes that mostly have yet to be modernized, says Mardy Leathers, who led Missouri’s Office of Workforce Development from 2017 through 2022.

“While there may be pockets of process improvements in the areas of service delivery, certification and vetting of training providers, and targeted industry sectors,” he says, “overall, most systems have not had an end-to-end redesign.”

Part of the problem is outdated regulations, he says, such as overly narrow definitions of which unemployed workers are eligible and a lack of focus on labor-market participation. And the challenges go beyond federal restrictions.

“What also seems to be at play is a lack of sophistication and understanding—coupled with a fear of risk—that often holds back local and state workforce development systems,” says Leathers.

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Better Investments

The federal workforce funding model needs a system-level overhaul, says Annelies Goger, an economic geographer and a fellow at the Brookings Institution’s Metropolitan Policy Program.

She describes WIOA as “an overwhelming morass of small programs” that are too small in scope to make much of a difference for participants.

For example, Goger says, a six-week program funded with a $2K federal voucher is more of a training “module” than adequate preparation for a well-paying job.

“We expect people to navigate from one island to the next,” she says. “How do we make sure these islands connect to something?”

A better approach, according to the report, would be to move away from a voucher system that relies on consumer choice and largely nonexistent information about results. “Federal job training policy should focus on making more funding available to directly support high-quality, sectoral training programs, including wraparound supports,” it says.

(This was a topic of discussion at the recent launch of the Workforce Futures Initiative, a collaboration of the Harvard Kennedy School, the American Enterprise Institute, and the Brookings Institution.)

For example, the report points to Year Up, Per Scholas, and Project QUEST, which have proven track records of positive impacts on the earnings and employment of their participants.

Lipson also points to the potential role of federal grant competitions, such as the Commerce Department’s Good Jobs Challenge, which can encourage cross-sector partnerships and support training investments for high-priority job roles.

“This kind of funding makes a bigger difference for more people,” she says.

Marina Zhavoronkova, a senior fellow for workforce development at the Center for American Progress, agrees with the report’s call to move away from what she describes as WIOA’s “high-volume, low-touch” system.

“It’s impossible for a training provider to support itself through onesie and twosie training vouchers,” says Zhavoronkova, a former workforce development official in Massachusetts. “The pot of money for training is really small. It makes sense that you should prioritize programs that are likely to lead to a good wage.”

The report notes that successful training tracks require far more money than the federal average spend of $1,854 per participant. It says all-in operating costs for employment programs with strong evaluations range from $8K to $35K per participant.

Those training programs help learners develop the social capital they need to succeed in the job market, with intensive wraparound supports, employer-relations teams, and cohort-based models where participants learn and advance together as a group.

Federal policy can drive in this direction, Zhavoronkova says, noting the recent move by the Biden administration to require that semiconductor manufacturers provide workers with childcare to access $39B in subsidies under the CHIPS Act.

Leathers says the goal of the public workforce system should be to help participants not only go to work, but also stay in work — by ensuring that they have the necessary support to move forward for at least three years. Unfortunately, he says, most programs are not designed to do this effectively.

The Kicker: “What we need is a model that helps participants grow and achieve their goals as they navigate from entry-level roles with lesser pay to more sustainable roles,” says Leathers.


National initiative aims to make sense of jobs data — and asks others to join

The U.S. Chamber of Commerce Foundation is leading an ambitious effort to create and promote the widespread adoption of standards for jobs and employment records. Now, it’s looking for more employers, government agencies, and policymakers to join. Read the full story on Work Shift here.


Reaching Adult Learners

The frustrating experience jobseekers face as they try to figure out which workforce training program will pay off is shared by many working learners as they hunt for college programs among a confusing — albeit better-funded — array of options.

Lumina Foundation recently tapped Sova to get a handle on what adult learners of color want to see as they make decisions about pursuing a college credential. The group conducted 23 focus groups with Black, Latino, and Native American participants between the ages of 25 and 55. Focus groups were held in California, Michigan, and Washington.

“Learners are less interested in data that tells them what is happening to other students in general and more interested in data that tells them what the college or program is doing to help students like them succeed,” the research found.

Five data elements were viewed as irrelevant: retention rates, persistence rates, average loan debt, loan default rates, and the share of students who take out loans.

What mattered most to respondents were:

  • Demographic data about students and college employees.
  • Outcomes and ROI data, such as regional career outcomes for graduates by program.
  • Information about relevant supports, including data on transfer credits and adviser-to-student ratios.
  • Data about professional network–building opportunities, such as employer partnerships at the program level.

One Black participant in a Seattle focus group said they had wasted years taking college courses when they didn’t know what they wanted to do for a career. The participant said they wanted a campus adviser who was knowledgeable about the field they were studying to enter.

The Kicker: “Show me if this career is gonna put my family on the right track to be successful,” they said.

Open Tabs

Jobs Site

A new career-services platform from the SkillUp Coalition offers exploration, training options, and job opportunities that do not require a college degree. The free site from the nonprofit group has a nationwide focus and features career navigation technology from WhereWeGo. It includes learn-and-earn jobs as well as social capital training. SkillUp recently created a similar site for young jobseekers in greater Dallas.

Digital Skills

While four in five workers report using digital skills in their work, few report skills beyond collaboration technology, digital administration, and digital project management, according to a survey from Salesforce of 11K+ workers across 11 countries. Roughly 10% of respondents say their role currently involves AI, with 14% citing encryption and cybersecurity, and 13% claiming to use coding and app development skills.

Education Costs

A recent federal analysis of the cost of educating community college students in Texas found it’s more than twice as expensive to hit statewide average success rates for a first-generation or older student than for one without extra needs, Jill Barshay reports for The Hechinger Report. Students from low-income households and English language learners cost 19 to 31% more, while dual-credit students are 16% cheaper to educate.

Rural Students

Community colleges located in rural areas enroll an average of 2,500 students compared to the national sectoral average of 8,500, and they often struggle with resources and hiring faculty members, according to a new report from the Aspen College Excellence Program. The report cites examples for overcoming challenges from 13 rural community colleges, including how to create paths to economic mobility for students.

Microcredential Competition

Annual revenue of nondegree programs from Coursera, edX, and Udemy has topped $1.5B and is growing by more than 20% for two of the companies, found a report from Eduventures. Yet the firms report large, sustained losses in the nondegree space, as well as high marketing costs. The analysis, which can be requested here, projects significant growth and competition challenges for the microcredential market.

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