Citation
Hollenbeck, K. (2009). Return on investment analysis of a selected set of workforce system programs in Indiana. Indianapolis, IN: Indiana Chamber of Commerce Foundation. [WIA Dislocated Worker]
Highlights
- The study’s objective was to examine the impact of the Workforce Investment Act (WIA) Dislocated Worker program on the employment rate, earnings, and benefit receipt of low-income adults who are dislocated workers.
- The author used a nonexperimental method to compare the short-term (three quarters after program exit) and long-term (seven quarters after program exit) employment, earnings, and Unemployment Insurance benefits between those who took part in the WIA Dislocated Worker Program relative to those who participated in the WorkOne program.
- The study found that, compared with those who participated in the WorkOne program, WIA Dislocated Worker Program participants had higher employment and earnings and lower benefit receipt.
- The quality of causal evidence presented in this report is low because the author did not ensure that the groups compared were similar before program participation. This means we are not confident that the estimated effects are attributable to the WIA Dislocated Worker 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) Dislocated Worker Program
Features of the Intervention
The WIA Dislocated Worker Program was authorized by Title I of the Workforce Investment Act of 1998 and was superseded by the Workforce Innovation and Opportunity Act (WIOA), effective in July 2015.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 Dislocated Worker 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 Dislocated Worker Program served people who had been laid off from employment, including those whose employers had closed permanently and who were unlikely to return to their previous industry of occupation. Eligible workers could receive three tiers of services through WIA. Core services were available to everyone and included job placement assistance, skills assessments, and provision of information on the labor market, among other services. Those unable to obtain a job through core services alone could receive intensive services—which included counseling and specialized assessments—and vouchers for attending training. 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 used a nonexperimental statistical approach called propensity score matching to create a comparison group of people who participated in WorkOne and were similar to WIA Dislocated Worker Program participants in terms of demographic characteristics, including gender, age, educational attainment, race, and employment and earnings history. The author then compared the two groups on employment, quarterly earnings, and benefit receipt. The author collected Indiana Workforce Intelligence System records and Unemployment Insurance records for those who had exited the WIA Dislocated Worker or WorkOne program in fiscal year 2006. The study included a sample of 1,839 workers who received services through the WIA Dislocated Worker Program and 272,780 workers who received services through the WorkOne program in Indiana.
Findings
- Employment. The study found that, compared with the rate of those who participated in WorkOne, the employment rate for the WIA Dislocated Worker group significantly increased by 17 percentage points in the third quarter after exit and by 16.5 percentage points in the seventh quarter after exit.
- Earnings. The study found that average quarterly earnings significantly increased by $410 in the third quarter after program exit and by $310 in the seventh quarter after program exit for those who took part in the WIA Dislocated Worker program compared with those in the WorkOne program.
- Public benefit receipt. The study found that Unemployment Insurance benefit receipt significantly decreased by $53 in the third quarter after exit for those in the WIA Dislocated Worker program compared with those in the comparison group.
Considerations for Interpreting the Findings
Although the author accounted for many underlying characteristics of the groups being compared, which could also influence their outcomes, the author’s decision to define the groups based on their date of program exit rather than program entry is problematic. For example, suppose that the WIA Dislocated Worker program and WorkOne participants were on identical wage trajectories before receiving services from their respective programs and that the average length of participation in the WIA Dislocated Worker program was six months, whereas that for WorkOne 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 Dislocated Worker participants’ earnings about 12 months after they started receiving services and WorkOne 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 training; it would be caused by the different elapsed time across the groups (12 months for WIA participants versus 7 months for WorkOne 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 the treatment and comparison group were compared at different follow-up points and therefore were not equivalent. This means we are not confident that the estimated effects are attributable to WIA Dislocated Worker Program; other factors are likely to have contributed.
Additional Sources
Hollenbeck, K. (2011). Short-term net impact estimates and rates of return. In D. J. Besharov & P. H. Cottingham (Eds.), The Workforce Investment Act: Implementation experiences and evaluation findings, (pp. 347-370). Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.