Citation
Hollenbeck, K., & Huang, W.-J. (2014). Net impact and benefit-cost estimates of the workforce development system in Washington state. (Upjohn Institute Technical Report No. 13-029). Retrieved from W.E. Upjohn Institute for Employment Research website: http://dx.doi.org/10.17848/tr13-029 [WIA Adult]
Highlights
- The study’s objective was to examine the impact of the Workforce Investment Act (WIA) Adult Program on the employment rate, earnings, and benefit receipt of low-income adults in Washington State.
- The authors used a nonexperimental method to compare short-term (3 quarters after program exit) and long-term (9 to 12 quarters after program exit) employment, earnings, and Unemployment Insurance benefits between those who took part in the WIA Adult Program with those who registered for services at the Labor Exchange Employment Services.
- The study found that, compared with those who registered for services at the Labor Exchange, participants in the WIA Adult Program had higher employment rates and average quarterly earnings and lower receipt of unemployment insurance benefits.
- The quality of causal evidence presented in this report is low because the authors did not ensure that the groups being compared were similar before program participation. This means we are not confident that the estimated effects are attributable to the WIA Adult Program; other factors are likely to have contributed.
- This study also examined the effectiveness of other workforce development programs. Please click here to find CLEAR profiles of those studies.
Intervention Examined
The Workforce Investment Act (WIA) Adult Program
Features of the Intervention
The WIA Adult Program was authorized by Title I of the Workforce Investment Act of 1998 and was superseded by the Workforce Innovation and Opportunity Act (WIOA), effective in July 2015. The Adult Program services, which remained essentially the same under WIOA, were designed to provide quality employment and training services to eligible workers. Administered through local workforce investment areas, the Adult Program served all people ages 18 and older through a set of core services; these include job placement assistance, skills assessments, and provision of information on the labor market, among other services. In addition, those unable to obtain a job through core services alone could receive intensive services—including counseling and specialized assessments—and vouchers for training attendance. Recipients of public assistance and other low-income people received priority for intensive and training services in local workforce investment areas in which program funds were limited. In addition, some local areas provided supportive services such as child care, transportation, and work-related financial assistance to those who qualified.
Features of the Study
The authors collected Unemployment Insurance records for those who had exited the WIA Adult Program from July 2005 to June 2006 to estimate the long-term impacts of the program in quarters 9 to 12 after program exit. They also collected Unemployment Insurance records for those who exited from July 2007 to June 2008 to estimate the short-term impacts in the third quarter after program exit. In Washington State, there were 3,874 adults who exited the WIA program in 2005–2006 and 2,864 who exited in 2007–2008. The comparison group was composed of people ages 22 to 60 at the time of exiting the Labor Exchange program who registered at the Labor Exchange. The authors used a nonexperimental statistical approach called propensity-score matching to create a comparison group that was similar to the WIA Adult Program group in terms of demographic characteristics, including gender, age, educational attainment, race, employment, and program participation history. The authors used a difference-in-differences model to compare the two groups on employment, hourly wages, hours worked per quarter, quarterly earnings, and receipt of benefits before and after participation.
Findings
Employment
- The authors reported that the percentage of quarters employed increased significantly by 12.8 percentage points more in the third quarter after exit and 10.8 percentage points more in quarters 9 to 12 after exit for those who took part in the WIA Adult Program compared with those who registered at the Labor Exchange. The treatment group also worked significantly more hours than the comparison group, with an average increase of 41.1 hours worked in the third quarter after exit and 66.4 hours worked in quarters 9 to 12 after program exit.
Earnings and wages
- The authors reported that average quarterly earnings increased significantly for those who took part in the WIA Adult Program compared with those who registered at the Labor Exchange, with an average increase of $1,189 more in the third quarter after exit and $766 more in quarters 9 to 12 after exit. The hourly wage also increased significantly for the treatment group, with an average increase of $1.99 more per hour in the third quarter and $1.44 more per hour 9 to 12 quarters after exit.
Public benefit receipt
- The authors reported that, compared with those who registered with the Labor Exchange, the rate of benefit use among WIA program participants significantly decreased by 1.7 percentage points in the third quarter after program exit and 1.9 percentage points in quarters 9 to 12 after program exit. The amount of benefits received was also significantly reduced by $59 in the third quarter after exit for the WIA group compared with the Labor Exchange group.
Considerations for Interpreting the Findings
Although the authors accounted for many underlying characteristics of the groups being compared, which could also influence their outcomes, the authors’ decision to define the groups based on their date of program exit rather than program entry is problematic. For example, suppose that the WIA Adult and Labor Exchange participants were on identical wage trajectories before receiving services from their respective programs, and that the average length of participation in WIA services was six months, whereas that for Labor Exchange was one month. At the conclusion of participation, they exited the program.
If we compared the groups’ earnings 6 months after their recorded exit dates, we would observe WIA participants’ earnings about 12 months after they started receiving services and Labor Exchange participants’ earnings about 7 months after they started receiving services. If both programs were completely ineffective and everyone stayed on their original upward-sloping wage trajectory, it would appear as though the WIA participants earned more 6 months after their exit dates. However, this would not be attributable to receiving WIA services; it would be caused by the different elapsed time across the groups (12 months for WIA participants versus 7 months for Labor Exchange participants). Therefore, studies defining the groups based on exit date, rather than entry date, cannot receive a moderate causal evidence rating.
Causal Evidence Rating
The quality of causal evidence presented in this report is low because treatment is confounded with systematic differences in outcome measurement follow-up length for treatment and comparison group members. This means we are not confident that the estimated effects are attributable to Workforce Investment Act (WIA) Adult Program; other factors are likely to have contributed.