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Skills Shortages Demonstration Evaluation Report

Source: Public Policy Associates, Incorporated: Lansing, MI; June 2003.
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Text: The following is the executive summary of the report. The full report may be found through the link above.

The U.S. Department of Labor, Employment and Training Administration, Office of Adult Services solicited applications for four grant programs that supported the development of partnerships and coalitions to support strategic planning and the development of targeted training curricula and training programs to alleviate skill shortages. Any organization capable of meeting the requirements of the SGAs were eligible to apply for the demonstrations. In total, 50 grantees located in 29 states participated in the four skills shortages grant programs. The grants were made in four waves beginning in early 2000, with the last awards in mid-2001. Funds for the first three programs were provided under the Job Training Partnership Act. The fourth program was funded under the Workforce Investment Act (WIA).

Key Findings

  • Transforming an assortment of organizations that provide workforce-development-related services into a functioning network capable of coordinating services and programs to meet employers' needs is a significant achievement. Grantees that undertook this challenge learned how difficult it could be to form effective partnerships but also how valuable the demonstration grant funds were as a catalyst for marshaling community resources to address community issues.
  • Workforce Investment Boards (WIBs) can originate and support regional consortia, pulling together the right individuals and resources to address skills shortages in particular industries. With nurturing from WIBs, the consortia can be rich sources of intelligence, insight, strategy, and even WIB membership. States can foster this role among WIBs by providing examples of successful projects and showing how such projects benefit the WIBs as well as the local industries.
  • For many of the community colleges and proprietary schools that participated in the demonstrations, the projects provided new connections to employers, industry associations,and employer-led consortia. Through their participation in community forums, workforce summit conferences, and curriculum-building workgroups, training providers were able to gain a deeper understanding of the skill gaps found in the existing workforce and the occupational training needs of the future. Absent the project, these connections would not have developed so quickly.
  • Prior to the demonstration projects, employers may have been aware of the need to increase the skills of their workforce, but they often lacked a clear sense of what steps could be taken to address their training needs. Consequently, at several sites, one of the fundamental contributions that the demonstrations made was the establishment of a training infrastructure that could help identify and support the delivery of industry-focused training programs for area employers.
  • Several of the grantees found it necessary to modify their training-program goals in response to changes in the economy that affected the hiring behavior of employers. Several grantees coped with this problem by placing a greater emphasis on incumbent worker training. Grantees faced a significant challenge in collecting employment data on incumbent workers because employers typically treated the type of data that the grantees needed as confidential.
  • In some cases, the subsidy for training appeared to be used to replace training that most likely would have happened at the employers expense anyway. However, most employers made it very clear that they would not be able to provide desperately needed training without incumbent worker grant training funds.
  • While some single-employer projects were quite valuable to the employers and potentially to workers in the region, there was little evidence that they affected regional workforce strategy or policy. Multiple-employer projects, on the other hand, had the potential to draw all key workforce actors to the table and, when such a group agreed on a policy or strategic direction, they were more likely to make an impact. As many of the grantees in the Skills Shortages II Demonstration quickly learned, the types of jobs available to workers with entry-level technical skills and limited job experience did not meet the wage requirements of the SGA. As a result, to fulfill the grant requirements, it often became necessary to focus training programs on incumbent workers in higher-level positions, thereby missing the opportunity to serve those in greatest need.
  • In the workforce and economic development fields, employers are the prime target for workforce policy consultation. Few employers, however, actually participate in that process. They are busy with the operational demands of their businesses and skeptical about the value of participating. The regional skills consortia seemed to often break through those barriers. In successful consortia, employers found that they had real impact and that their time was well spent. Having such an experience persuaded many employers to participate in other ways. Some made presentations at a national USDOL-sponsored symposium. Some have joined their Local WIBs. No doubt, others have found additional paths for ongoing participation.

  • In most federal demonstrations, those making funding decisions are faced with an "all-or-nothing" decision at the outset, even when the value of a proposed demonstration is not completely clear. If funding for an initial phase were separated from the implementation phase, USDOL decision makers would have the chance to see whether the proposals have a good prospect for successful implementation.
  • The skills shortages demonstrations showed that relatively modest infusions of federal dollars could stimulate great interest in and activity around a federal goal. With too much investment, state and local policy and interests can be overwhelmed; big dollars can stimulate meaningless activity. With too little investment, on the other hand, critical mass will not be reached and nothing will happen. While the Skills Shortages Demonstration Program provided grants of $500,000 to $2 million, at least two states experimented with providing much smaller grants to local or regional skills consortia. These grants, which were often in the $20,000 to $100,000 range, showed that these modest investments can stimulate new connections among employers, education and training providers, and the workforce development system.
  • The workforce system tends to look to job placement and wage replacement as key outcome measures for participants. For projects that attempt to build infrastructure, such as regional skills consortia, those outcomes are not likely to be realized during a one- or two-year project. It is possible to measure progress on creating the infrastructure that USDOL hopes will lead to those outcomes.
  • Some community colleges responded well to the needs of employers and workers while others were not as creative or responsive. Since much community college funding flows from or through the states, states should encourage community colleges to be active participants in and contributors to regional workforce development.
  • USDOL should be much more clear about what it means by and expects in the way of sustainability, and it must require that progress on building toward sustainable projects be included in each quarterly progress report. Clear milestones should be established.
  • Once a first round of training has been developed and deployed, a successful demonstration should attract employer funding that will offset further costs. Without such a policy, federal subsidies could continue in one form or another for an indefinite period of time. This may simply reduce training costs for one or a handful of employers and thus tilt the competitive playing field to their advantage.
  • The grant period should be extended for the purpose of maintaining the evaluation for a longer time. A final year or two might include only enough funding to pay the costs of collecting data, reporting results, and, if appropriate, hosting evaluation site visits. This is common practice in funding by major private foundations and, if adopted by USDOL, could dramatically enhance its understanding of the results of the demonstrations it funds.
Federal Policy Issues

  • Successful demonstrations were almost always geographically compact and focused on labor market niches specific to an industry or subindustry. In many cases, examples emerged of demonstrations starting broad and narrowing focus as they learned these lessons. Federal policy and funding for any future demonstrations in this area must acknowledge this reality and challenge grantees to address it at the outset.
  • When training is provided with WIA funds, it is mostly through ITAs, and case managers cannot steer ITA recipients to particular training providers, even those that are part of a skills shortages consortium. This apparent contradiction with the WIA principle of customer choice must be addressed in order to make the work of the skills consortia meaningful.
  • While it is clear that short-term training can be very helpful to getting a job of some kind, it is often not in itself sufficient to make participants competitive for good jobs. Participants tell stories of taking exactly the type of training that employers said was necessary, only to find that they still could not compete for jobs with those who had worked in the field. Federal policy must acknowledge and accommodate the reality that experience is at least as important as training and education.
  • WIBs can serve individuals from outside their service areas, but some see financial reasons to avoid doing so. Likewise, WIBs operating within the same labor market must deal with the same employers and skills shortages but often act as competitors instead of collaborators. Regional skills consortia by definition focus on workforce issues for an entire region. Artificial subdivisions within the region can make the system appear awkward or irrelevant to employers. Federal policy must be clear about the need for and importance of cooperation and collaboration among WIBs.