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VII. Skill Development

A significant body of research shows that higher levels of education are closely associated with increased earnings and lower rates of unemployment. For example, those with postsecondary credentials earn substantially more and work more hours than those with a high school education or less (Duke, Martinson, and Strawn 2006). Between 1973 and 2003, the real wages of workers with less than a high school diploma declined by 20 percent, while the real wages of those with a college education increased by 18 percent (Ganzglass 2006). However, the education and skill levels of low-income individuals remain low.

Given these trends, an important approach for improving the employment retention and advancement of low-wage individuals is through increasing their skill levels and human capital. Education and training has primarily taken the form of providing education (primarily English as a Second Language (ESL), basic education, and GED programs) and job training. Skill development is not a new approach for improving the economic status of low-wage individuals—numerous service delivery systems and funding streams are dedicated to providing a wide range of education and training services—but there are some strategies that, building on past research evidence, appear to be innovative and merit further research. This section first reviews the research evidence on skill-development approaches.

Because of its prevalence in addressing the needs of low-wage workers, a significant body of research has accumulated regarding the role education and training can play in improving economic success for low-income populations. This past work is critical for understanding what is “innovative” in this area and shows that the nature and content of education and job training at least partly determines their effectiveness. Key findings from this past work that are important in identifying innovative skill-development approaches can be summarized as follows.

Providing a “mix” of services, with a strong link to employment, is essential. Welfare-to-work evaluations have found that providing a mix of services—including job search, education and training, and case management—while maintaining pressure on most individuals to gain employment, can produce strong results (Hamilton 2002). The Portland, Oregon, site in the multisite National Evaluation of Welfare-to-Work Strategies (NEWWS) used this approach and generated large increases in employment, earnings, and job stability—surpassing the other sites in the NEWWS evaluation as well as results from other evaluations. The Portland program is also notable because, while it stressed the need for clients to gain employment fairly quickly, it also encouraged them to find higher-wage jobs and employers, whenever possible.

Programs with a strong focus on basic education but only limited linkages to employment or job training—an approach that was more common before the implementation of TANF—have generated limited earnings gains, with most performing worse than mixed service– or job search–focused interventions (Martinson and Strawn 2003; Pauly 1995). It is likely that the kind of basic education provided in these programs—with a focus on building basic skills and obtaining a GED—was not conducive to labor market advancement. Much of what was provided was unrelated to specific jobs that were available in the local labor market and, as discussed below, did not generate an increase in credentials that would be recognized or rewarded by private-sector employers. In contrast, the Center for Employment Training (CET) in San Jose, California, also used an approach that integrated basic education and job training, and included strong links to employers. This program produced strong results in early studies (Burghardt et al. 1992). Efforts to replicate this model in other sites have thus far proved disappointing, though the impact evaluations to date may understate the benefits of this approach.10

There have been fewer studies of education and training efforts as a post-employment strategy. Several initiatives in Riverside, California, focus on increasing participation in education and training among low-wage workers, with one targeting welfare recipients who are working but remain on assistance. Early evidence from the experimental studies of these programs indicates they are not affecting labor market outcomes, although the follow-up timeframe in some may be too short to see the impacts of an education-focused intervention (Bloom, Martinson, and Scrivener 2005; Fein et al. 2003).

Job training has been effective. Some studies have shown some positive effects of job training on earnings for disadvantaged adult women. This result emerged in the national evaluation of the Job Training Partnership Act (JTPA), which was the forerunner to WIA. This program produced modest earnings impacts for low-income adult women, with on-the-job training producing larger earnings gains than more standard classroom training, again suggesting the importance of training linked to the workplace or to a particular job or employer (Orr et al. 1996). Even a nonexperimental analysis of three sites in the NEWWS evaluation (not including Portland) found that high school nongraduates in basic education activities had substantially larger increases in longer-term earnings if they also participated in job training (Bos et al. 2001). One concern, though, is that many individuals with low skills and/or limited English have restricted access to existing training programs due to entry requirements. About 40 percent of community college students nationally need to take at least one remedial course when they begin their programs, and this can be even higher in urban areas (McCabe 2000).

Importance of obtaining credentials. Training efforts that lead to established credentials that are recognized and valued by employers have produced particularly strong results. A number of nonexperimental studies have found that for those who obtain associates degrees and other certification at community colleges, the returns have been fairly positive (Grubb 1996; Kane and Rouse 1999; Leigh and Gill 1997; Mathur et al. 2004). In addition, the successful Portland program in the NEWWS evaluation increased the proportion of high school dropouts who obtained a high school diploma or GED and a second education or training certificate (usually a trade license or certification) (Hamilton 2002). None of the other NEWWS sites produced increases in receipt of this type of credential.

Encouraging program completion and reducing dropout rates is difficult. National studies indicate that retention in job training and education programs is a problem. For example, nearly half of students attending a community college do not obtain a degree or enroll in another college or university within six years. In part this is due to their part-time attendance—nearly two-thirds of community college students attend college less than half time, and it is difficult to attend more than one-quarter time (Kazis and Leibowitz 2003). Research suggests that many students want to earn a degree but are overwhelmed by the competing demands of work, family, and school (Gardenhire-Crooks, Collado, and Ray 2006). Institutional barriers, such as poorly tailored instruction or inadequate advising may also impede students’ academic progress (Brock and LeBlanc 2005).

Financial supports may be critical. The primary need-based financial aid program for postsecondary education is the federal Pell Grant program, which makes awards to students based on the cost of attendance at an institution less the expected family contribution. This program has had significant effects on the enrollment of nontraditional adult students in higher education, but less so on the collegiate attainment of traditional students (Turner forthcoming). A recent experimental study shows that enhanced financial aid designed to help low-income students with their expenses and provide an incentive to make good academic progress resulted in higher levels of enrollment, passing more courses and earning more credits, and higher rates of completion in subsequent semesters (Brock and Richburg-Hayes 2006).

Even when taking into account the existing financial aid available through the federal Pell Grant Program, most low-income students have substantial unmet needs. In 1999–2000, the average unmet need for Pell Grant recipients attending community colleges throughout the United States was over $3,000 (King 2003). In addition, while working students who enroll less than half time are technically eligible for federal aid, very few individuals actually receive federal aid because of limited funding (Choitz and Widom 2003).

Overall, we find that skill development is an important approach for improving the employment prospects of low-income persons. While not a new approach, it clearly addresses one the major causes of low earnings, and past research indicates new directions that are important to develop and evaluate. Given the widespread number of systems and funding sources involved in education and training, understanding innovative directions in this field is of major interest to a wide range of federal, state, and local policymakers.

For this report, we focus on two broad types of skill-development approaches: individual-based (supply-side) education and training that occurs through public and private institutions,11 and employer-based (demand-side) education and training that occurs at employers or involves a significant level of involvement by employers to ensure that training meets their needs. Individual-based training is typically more general and tries to give students a range of skills that can be used in different jobs, while employer-based training gives up this generality to improve the fit of skills to specific employer needs. We first discuss strategies that are focused on individual-based skill development, and then move to a discussion of those strategies that are employer based.

A. Individual-Based Approaches to Improve Skill Development

Innovation that builds on past research evidence about individual-based skill development for the low-wage population is underway in many states and localities. Much of the innovation is occurring at community colleges, which are a major provider of education and training for this population, although some community-based organizations are involved as well. To group innovative program examples of the individual-based skill-development approach, we initially examined the same three strategies for improving education for low-skill populations identified by MDRC in its Opening Doors Demonstration:12 instructional reform, financial assistance, and student supports (Brock and LeBlanc 2005). However, given the pervasiveness of student supports in the vast number of skill-development programs we identified, for the purposes of this study, student supports are considered an element of an innovative program rather than a stand-alone approach (see discussion below). Thus, in this area, we focus only on instructional reform and financial assistance as innovative skill-development approaches.

1. Instructional and Curricular Adaptations

Several curricular reforms have been identified as having the potential for improving outcomes for low-income students, although most have not been evaluated (Kazis and Leibowitz 2003). It is useful to think of instructional adaptations in terms of two groups: programs for working adults who may not have the skills to qualify for higher-level training or college programs, including those with limited English skills, and programs for working adults who qualify for college degree programs. For those who are not ready for college or training in terms of their skill levels, we discuss “bridge programs,” a strategy to increase low-skill individuals’ access to a higher level of training. For those who qualify for college degree programs, we examine strategies for instructional adaptations that address the needs of low-income families juggling work and family responsibilities.

“Bridging” the connection between basic skills development and entry-level training. “Bridge” programs are designed to address two of the shortcomings of education and training programs identified in past research. First, for those who do not have the skill levels necessary for postsecondary education, these programs are designed to bring the students’ academic skills up to the level required for entry into college-level credit programs, and thus improve individuals’ access to training provided through a range of institutions and, possibly, to regular degree programs. Second, they also attempt to improve outcomes compared with stand-alone basic skills and training programs by integrating vocational and education or basic skills with a focus on employment. There are several components of bridge programs that appear important (Henle 2004):

• Contextualized learning strategies. Courses such as remedial English, reading, and math are modified to incorporate materials from specific occupational fields. Contextualization is frequently one element of a broader package of instructional and structural innovations that include a “learning community” of students who take classes together with more applied learning opportunities.

• Instruction in job-specific competencies. This includes efforts to tailor instruction to the needs of different employment fields by identifying the specific competencies required by a job. Some programs focus on one particular industry while others may provide students with multiple options.

• Paid apprenticeships or internships in the relevant field. These can provide a strong connection to employment as well as providing a source of income to low-income students.

• Strong links to credit-bearing degree or certificate programs. Integrating noncredit and existing credit programs can help students move from precollege to credited academic programs that are valued by employers.

Developing bridge programs that provide low-wage workers with better access to higher education programs is an area of growing interest, particularly at community colleges, although the development of these programs is certainly not widespread at this point. We identified five innovative bridge programs that are profiled in appendix table A.4—these include the Kentucky Ready to Work and the Washington I-BEST program, both of which are statewide programs lead by the community college system; a bridge program in biotechnology industry operated by a community-based organization, San Francisco Works; and a multioccupational program at Denver Community College. These programs are all relatively strong in terms of their program design and services, and all have been operating for at least two years.

While the programs profiled are similar in terms of the basic application of a “bridge” strategy, they vary along key dimensions. Some are focused exclusively or primarily on TANF recipients (Kentucky Ready to Work and Denver Community College) while others focus more generally on low-wage workers (San Francisco Works), and one is designed specifically for non-English speakers (Washington State). Some are relatively large-scale statewide initiatives (Kentucky and Washington), while the remainder were developed at the local level and have the capacity to serve a limited number of participants each year. Box 5 highlights a multioccupational program at Denver Community College that focuses primarily on TANF recipients.

Box 5 Curricular and Instructional Reforms: Denver Community College The Essential Skills Program (ESP) operated by Denver Community College is a multioccupational certificate “bridge” program that prepares individuals with low skills for entry-level jobs and higher-level training programs. Training is available in five areas: information technology, early childhood education, financial services and accounting, community health, and medical clerking. With a focus on serving TANF recipients, ESP classes provide work-readiness preparation followed by short-term basic skills and occupation-specific training combined with job experience in a career pathway. The program takes five months to complete, and results in approximately 16 community college credits and an essential skills certificate in the chosen field. In the first month, students are required to take a full-time course combining work-readiness activities and vocational training specific to each track. This is followed by a three-month internship that counts toward a degree if the student stays in the same vocational area (wages are set at the entry-level wage for the employer). During these three months, students are simultaneously taking about 15 hours of contextualized classroom instruction that also teach competencies for the intended job. Staff provide academic and career counseling, referrals to financial benefits they may be eligible for, and job placement services throughout the program. Retention services, job coaching, and referral to support services are provided for one year after placement in unsubsidized employment. The program enrolls approximately 200 students per year.

Program redesign of college credential programs. For students who qualify for postsecondary education, the structure and curriculum of postsecondary education, even at community colleges that are more geared toward low-income students, may make it difficult for them to succeed. An approach for increasing the skill levels of low-income adults that addresses this problem is instructional adaptations that make it easier for students in credential programs to earn their certificate or degrees by reducing the amount of total time spent in classes, or through shorter sequenced modules that yield interim credentials with value in the labor market. This strategy can make it easier for individuals to combine work and school and to address the competing demands of school, work, and family. These innovative initiatives generally share a number of design characteristics:

• Modularized curricula. To assist students in combining education and work or to enter and exit education as their circumstances permit, curricula can be modularized by breaking certificated and degree programs into smaller sets of courses.

• Identifying multiple entry and exit points tied to jobs and further education. These can include “road maps” that graphically outline the “ladder” for an occupation or career. While formal efforts in this area—known as career ladder programs—are discussed in the next section on employer-based strategies, many individualized skill-development strategies are also adopting this career-mapping exercise into their program design in order to strengthen their links to employment.

• Accelerated programs with flexible scheduling at night and on weekends. These allow students to more easily combine work and learning, by lessening the time spent in class and providing training that accommodates work schedules.

• Establishing credentials (including degrees, certificates, and industry certifications) that provide easy articulation across programs and institutions. These provide employers with information about individuals’ skills in a specific occupational area, thereby demonstrating job seekers’ qualifications and skills.

Box 6 provides a profile of Portland and Mt. Hood Community colleges in Oregon, two postsecondary institutions that have done extensive work in redesigning their curricula and instruction to be more accessible to low-income working families (also see appendix table A.4). Their work, which covers instruction in a broad range of instructional areas, forms the basis for a statewide initiative that will be implemented in the near future.

Box 6 Curricular and Instructional Reforms: Portland Career Pathway Program Portland and Mt. Hood Community colleges’ Career Pathways program provides a wide range of short-term training programs designed to be flexible for working students. Key components include “chunked” curriculum (offering courses in one or two terms to build skills for an entry-level job), cohort learning, 33 hours of job-readiness instruction focused on job requirements and advancement options in a specific industry, 3–12 week internships, and job placement services. Most programs are between 14 and 18 college-level credits and last either one or two semesters. Students can enter at four different points of the year. Students earn an employment skills training certificate for 12–44 credits. Career Pathways coordinators work with clients directly to provide support services and career counseling but are also responsible for developing new trainings, developing curricula, coordinating internships, and providing job development and placement services. Students are assigned a case manager who provides support services and career counseling. Skill areas include accounting/bookkeeping, criminal justice, phlebotomy, medical coding, medical customer service, and CNC operator. The success of this program, begun in 1998, sparked interest at the state level. Oregon is now developing a more comprehensive career pathway program that includes the development of 29 career pathways and the participation of all seven state community colleges in the initiative.

2. Financial Assistance

Another approach that appears important for improving the skill development of low-income students is the provision of additional financial assistance. As discussed above, while the federal Pell Grant program is available to provide assistance to low-income students, the amount of this assistance is often insufficient to cover the costs of school or training. In addition, most state grant programs tend to have eligibility requirements that are similar to federal grant programs, which may make them less accessible to nontraditional students. Further, many state programs restrict eligibility to students coming directly out of high school.

We identified five innovative financial aid programs that are profiled in appendix table A.5. Arkansas, Georgia (see box 7), and Washington have examples of major statewide efforts to improve financial assistance to low-income students. Arkansas’ Workforce Improvement Grants program is a need-based financial aid program for nontraditional adult students. While a high school diploma is required, it targets working families who want to enroll part time (who often do not qualify for a federal Pell Grant because their income is too high). Washington State will launch a new initiative in fall 2006 to provide funding to eight community colleges to develop financial assistance programs that are directly linked to participation in career pathway programs, an innovative program that combines employment-focused education and financial assistance.

Box 7 Financial Aid: Georgia's HOPE Grants Program Operating statewide since 1993, Georgia’s HOPE Grants Program covers tuition, fees, and books for nontraditional students (including those without a high school diploma or GED) to enroll in certificate and nondegree programs, even if they are attending part time or taking only one course. This program supplements Georgia’s widely recognized HOPE Scholarship Program that provides merit-based scholarships to high school graduates. While it is not a need-based initiative, the HOPE Grants Program is designed to address the financial needs of adults who do not qualify for the scholarship program or for the federal Pell Grant program.

Minnesota has pursued a different strategy to provide funding for skills development for low-income workers. Instead of expanding financial assistance for education through the state’s higher education system, Minnesota established a grant program in 2001 under the umbrella of its incumbent worker training program and funded through the Unemployment Insurance (UI) tax system, to cover the costs of short-term training that is not reimbursed through other sources, to individuals with income below 200 percent of the poverty level. A range of private and public training organizations apply for grants and then allocate financial “awards” (i.e., assistance) to participants when they enroll in training programs.

3. Enhanced Student Services and Support

Many low-income students could potentially benefit from a more intensive set of services to support their participation in skills training and help counter the ongoing challenges related to meeting work, school, and family demands. Student services are typically defined to include academic guidance and counseling, academic supports (such as tutoring), personal guidance and counseling, career counseling, and support services (child care, transportation, and book and supply resources) (Purnell and Blank 2004).

Most colleges offer at least some student services, but there is wide variation in how the services are provided and arranged. Moreover, because services are in short supply and poorly funded, many schools have extraordinarily high student-counselor ratios (Keim 1989). Research on counseling and student services suggests that such programs can play an important role in retention and graduation, although much of the research has occurred in four-year institutions rather than community colleges (Baily and Alfonso 2005).

As discussed above, while there are programs that focus primarily or exclusively on providing enhanced student supports, our scan suggested that most of the innovative skill-development programs identified through this project (including some of the employer-based strategies discussed in the next section) combine student supports with curricular and other adaptations for low-income individuals. While part of a package of broader services, program administrators widely acknowledged them as critical to the success of their programs. The support services are generally provided by school staff assigned to work with students enrolled in the program, and are above and beyond what was typically offered to students through the educational institution. For example, in the Kentucky Ready to Work program, students are assigned a case manager who works with them throughout their tenure in the bridge program. The Denver Community College Essential Skills Program “fast-track” occupational certification program uses a similar strategy to combine vocational training, work readiness, case management, and internships in a sequence that gains participants entry into high-demand occupations with good wages. Case managers continue to work with staff for one year after they find employment.

B. Employer-Based Strategies for Improving Skill Development

Employers can play an important role in providing demand-driven skill development to their low-wage workers, either at the worksite, through working with educational institutions to design appropriate training, or through providing financial assistance to pursue further education. In general, employer-based skill-development approaches fall into two broad categories: (1) sectoral or industry-based training programs that involve multiple employers and (2) individual employer-provided training programs (commonly known as incumbent worker or customized training programs).

1. Sectoral Training Programs

Sectoral training programs focus on providing training to a cluster of employers in one segment of the labor market. These initiatives seek to strengthen connections between supply-side and demand-side systems in ways that promote economic growth and the advancement of low-wage, low-skilled workers. Sectoral strategies strive to accomplish this by strengthening the connection between low-income or other targeted job seekers and employment opportunities in local or regional economies, primarily through the provision of skill training that is directly linked to employer needs. These industry-based training strategies allow common workforce needs to be addressed across a number of employers, rather than through developing more narrow customized training programs for just one employer. Because their competitors share the investment, the economies of scale for employers in sharing training costs make training more affordable; they may also view joint training endeavors as less risky than individual efforts.

Sectoral training programs can vary significantly in terms of overall scale and scope, including the number of industries and employers involved. A key element of this approach is to have industry knowledge and understand employer needs when developing and designing training programs. This is generally accomplished through the use of an intermediary—an organization that builds in-depth knowledge of the industry, establishes relationships with multiple employers, coordinates training options, and conducts research to monitor the industry’s changing needs. Many different kinds of organizations can perform the function of a sector intermediary, including workforce investment boards, community-based organizations, business associations, educational institutions such as community colleges, and union organizations. Sectoral initiatives also generally involve a range of private- and public-sector partners. In the sectoral programs identified as innovative for this project, employers, workforce investment boards, community colleges, and union organizations were particularly important partners.

There are a large number of sectoral initiatives in operation (see for example Pindus et al. 2004) as well as an organization dedicated to the development of these initiatives, the National Network of Sector Partners. While sectoral initiatives have not yet been rigorously evaluated, nonexperimental longitudinal studies of participants in several initiatives found they experienced improvements in employment rates and wages (Conway and Rademacher 2004; Elliot et al. 2001). One rigorous experimental study that includes the evaluation of four sectoral programs, the Sectoral Employment Demonstration conducted by Public/Private Ventures (PPV), is underway.

We consider sectoral training an innovative approach because it meets several of the criteria identified for this study. The approach addresses the lack of skills and the lack of access to higher-quality jobs among low-wage workers. Sectoral training strategies are an area of growing interest across the country, with a number of new initiatives developing in recent years. Sectoral strategies have generally been considered a local strategy, but some states are now moving toward more systematic development of this approach.13 In addition, the U.S. Department of Labor (DOL) has awarded grants to states to develop and expand regional employment and economic development strategies, and these grants are likely to support skills training in high-demand sectors.14 There are several important components of sectoral training programs:

• Provision of training linked to specific jobs in a particular field. Sectoral initiatives generally incorporate many of the innovations in skill-development for low-income individuals discussed above—fast-track remediation programs that allow individuals at lower skill levels (including those with limited English skills) to enter training programs, modularization of courses to allow entry and exit at different points, flexible schedules that are amenable to working families, and contextualized instruction where learning is facilitated by simulating actual work conditions. They differ from some of the innovative individual-based programs discussed above because of the significantly higher level of employer involvement in designing training programs, the practice of working across the industry to develop skill standards for particular jobs, and a commitment by employers to hiring graduates.

• Linking low-income individuals with quality jobs by making changes within industry in terms of hiring, training, promotion, and compensation practices. This occurs in several ways. Many of the initiatives only provide training in jobs that pay a certain level and provide employee benefits. In addition, most of the initiatives have improved access for low-income individuals to the training through better recruitment and partnerships with local community-based organizations and public programs such as TANF and One-Stop Career Centers. Finally, some initiatives have also taken steps, including the provision of technical assistance, to help industry make structural changes to improve wages and benefits associated with particular jobs in ways that benefit both businesses and workers.

• Provision of support services and career counseling. These programs also generally cover the cost of tuition, books, and necessary supplies, provide assistance with child care, and include career and academic counseling to ensure high completion rates.

As shown on appendix table A.6, for this project we profile some of the larger and more mature sectoral programs, some of which have been involved in longitudinal research studies and two of which are involved in the Sectoral Employment Demonstration.15 We describe a range of different types of sectoral programs to illustrate the diverse nature of the initiatives. These include three initiatives—Project Quest, Capital Idea, and the Wisconsin Regional Training Partnership (WRTP)—that provide training in a number of industries; the District 1199C Training Fund and Cooperative Home Care Associates (CHCA) that focus on the health care industry; and the Culinary Training Institute (CTI) that trains entry-level and incumbent workers on the Las Vegas hospitality industry. Some of the programs are designed to accommodate working individuals, while others require a full-time commitment. Several, including WRTP, the District 1199C Training Fund, CHCA, and CTI, have established their own training facilities. Most operate at a relatively large scale, ranging from approximately 100 participants annually at Capital Idea to more than 4,000 at the 1199C Training Fund. Box 8 highlights two of these programs.

Structured career ladders. A subset of sectoral initiatives focuses on developing career pathways that lead to higher-paying jobs. Although job responsibilities and earnings tend to correlate roughly with skill sets and levels, this strategy responds to the reality that enabling people to move up from entry-level jobs can take more than education and training. Often there is no pathway for low-wage workers to advance through a progression of more responsible and better-paying jobs as they gain skills and experience (Fitzgerald 2006). Career ladder programs explicitly attempt to address this issue by providing a set of connected courses and programs, with extensive supports for students and information to track their progress. These programs enable students to advance to better jobs within a firm or industry through obtaining higher levels of education and training. The components of a strong career pathway program include:

• A “road map” describing jobs in industries of importance to the regional economy and illustrating the connection between education and training programs at a range of levels. This road map details the requirements to enter programs at each level, including basic skills training, entry-level training, and upgraded training and education (Alssid et al. 2002).

• Easy-to-navigate transitions from noncredit to credit programs and from multiple entry, exit, and reentry points. This includes transitions from certificate programs to degree programs and multiple connection points between industry and professional certifications and four-year degrees.

• A modular curriculum that breaks certificated and degree programs into smaller sets of courses. This allows students to work while pursuing their education and to enter and exit education as their circumstances permit.

• Support services. This includes access to services such as career counseling, tutoring, child care, financial aid, and job placement.

Box 8 Sectoral Training Programs: Capital Idea and the 1199C Training Fund Capital Idea. Initiated in 1999, Capital Idea, a nonprofit community-based organization in Austin, Texas, operates several training programs to provide low-income individuals, who traditionally have not had access to college-level careers, with precollege- and college-level training in growth occupations. The program focuses on providing training in jobs that pay at least $13 per hour and provide benefits and opportunities for advancement in the health, technology, and accounting fields. Capital Idea works with area businesses to develop the programs and training components according to employer specifications, and then contracts with or refers individuals to community colleges and private vendors for training. The program targets unemployed and underemployed adults with incomes up to 200 percent of the federal poverty level. Programs generally require a full-time commitment, with at least 20 hours per week of class time. Most of the training programs are long term, and most students complete the requirements in three to four years. The program pays for all training costs including tuition and fees and also provides child care, transportation, and emergency assistance. The program offers several on-site programs, including a College Prep Academy that provides intensive (25 hours per week for 12 weeks) preparation in reading, writing, and math to pass the Texas Higher Education Assessment (required to take college-level courses); a GED prep program (20 hours per week); and an evening English as a second language (ESL) program. Another key element is the services provided by career counselors, including career advice and counseling and peer group meetings. Placement coordinators help connect students to jobs during the classroom phase and after they finish the program. The 1199C Training Fund. District 1199C, Philadelphia’s largest health care worker union, founded its Training and Upgrading Fund in 1974 with the goal of promoting entry into the health care field and providing health care employees the training necessary to advance on a career ladder. The Fund operates the Thomas Breslin Learning Center, which provides courses ranging from basic skills for entry-level jobs to college degree programs in the health field. After enrollment, students are placed based on an academic assessment and a career counseling session that outlines an educational plan. Four levels of remedial programs (including ESL) and a high school diploma program are available, with instruction contextualized for the health care field. Training programs include prenursing bridge programs; nursing assistant programs; an 18-month part-time practical nursing program; and a program to help practical nurses receive credits toward and link with a RN degree program. The Center also offers career counseling and placement services. Each student is placed with a case manager to provide ongoing career and personal counseling. Basic skills offerings at the Center are available free to all students, and some employers cover tuition costs for upper-level classes; 1199C members are eligible for up to $5,000 a year in tuition reimbursement. The Learning Center has 40 full-time staff plus 70 part-time faculty members and is open 14 hours a day, 7 days a week.

Our scan of innovative career pathway initiatives found some noteworthy variations. First, as shown in appendix table A.7 several states are developing innovative statewide initiatives that provide grants to partnerships of training providers (typically community colleges), employers, and public-sector partners to develop career pathway programs that meet local industry needs. State funds are often used for these initiatives, but some also include federal or foundation grants. Examples of states with sectoral strategies that include this collaborative partnership dimension include Kentucky, Arkansas, and Ohio (see box 9). These states are all operating statewide career ladder initiatives with the state community college agency as the lead agency, but working in close collaboration with employers. Massachusetts also has a statewide career ladder, the Extended Care Career Ladder Initiative, focused specifically on job advancement in the nursing home industry, particularly for certified nursing assistants but also extending to higher levels of the allied health profession.

Box 9 Career Ladders: Kentucky’s Career Pathway Initiative The Kentucky Career Pathways initiative, overseen by the Kentucky Community and Technical College System, gives grants to local partnerships of community colleges and businesses to develop and implement career ladders that focus on job and educational advancement for low-income individuals and meet business needs. Based on employer input, these career pathways lay out a sequence of connected skill upgrading and job opportunities, with each education step on the ladder leading to a job or further training. Each college received a grant to design a career pathway in partnership with employers and other stakeholders (all 16 are developing health career pathways; 3 are also including manufacturing pathways; 1, construction; and 1, transportation). Colleges are encouraged to develop bridge programs that teach basic skills in the context of training for jobs. The career pathways are primarily credit-based training that may be augmented with noncredit customized training as necessary. Pathways at the two-year institutions articulate with certificates, diplomas, and associate’s and bachelor’s degrees for those students who wish to pursue additional education. Community colleges are encouraged to offer curricula in modularized formats, at alternative times (such as evening and weekends), and at alternative sites, such as at the workplace. The colleges are providing case management that may include access to child care and transportation, financial aid, tutoring, academic advising, career coaching, and job placement.

Second, some of the innovative local sectoral initiatives have an explicit focus on developing career ladders discussed above, with the training primarily designed for incumbent workers in the industry (most of these programs also include a pre-employment training component). As shown in appendix table A.6, these sector-based career ladder initiatives include the Boston SkillWorks program (which focuses on developing both entry-level training and career ladders in four industries: health care, automotive, hospitality, and building management) and the Instituto Progresso in Chicago (which has developed a career ladder in health, specifically for Spanish-speaking immigrants). The Culinary Training Institute and the District 1199C Training Fund discussed above also focus on career ladder training. For example, the Culinary Training Institute provides free upgrade training in higher-paying classifications of the hospitality industry for incumbent workers after 6 months on the job. District 1199C provides skills training for several levels of health care workers with schedules and courses developed specifically for working parents.

Industry-based certifications. Another potentially innovative element of sectoral training programs are occupational skills certificates for individuals who complete training programs that award a credential that is portable from one employer to another. Occupational skills certificates provide a mechanism for individuals to document that a specific set of job skills has been mastered. If businesses identify the competencies required to earn the certificate, then the skills certificates provide a uniform way for business to communicate the skills they require for specific jobs and for community colleges and other providers to standardize the training they offer. States have sought to incorporate industry-based or state-developed occupational certifications into their public workforce and community and technical college offerings (National Skills Standards Board Institute 2003). As a strong example of this approach, shown in appendix table A.7 and box 10, we profile a statewide credentialing program in Georgia.

Box 10 Credentialing: Georgia’s Certified Specialist Program Developed by the Georgia Department of Technical and Adult Education in partnership with groups of businesses, this program is designed to assist businesses in finding skilled workers by developing standardized, statewide, credit-bearing curricula and credentials provided by the state’s technical colleges in key occupational sectors: manufacturing, warehousing and distribution, construction, customer service, and life and health insurance. Employer-created, standardized statewide credentials and curricula are offered for college credit in five high-demand occupational areas: manufacturing, warehousing and distribution, construction, customer service, and life and health insurance. While more than 500 for-credit technical certificate programs are offered in the state, only five are part of the Certified Specialist Program (CPS). Students can enroll each quarter, and colleges can offer classes more often if a business or a group of small businesses has enough workers to train to create a class. The CSPs are 15 to 16 credit hours (about 160 hours of class time), with tuition costs usually covered by the Hope Grant (see description above). Efforts are made to schedule classes at times when workers can attend. The CSPs, as well as the other technical certificates offered by the technical colleges, are for-credit so that students can build toward diplomas or associate’s and bachelor’s degrees. CSPs are marketed to potential students as a way to advance in their careers and branded with the logos of businesses that helped to create the credential. As of 2005, more than 20,000 certificates have been issued.

Overall, it is important to recognize that while sectoral approaches offer powerful advantages, there are some formidable barriers to carrying them out successfully. Many of the large-scale sectoral initiatives, including most of those profiled in this report, require the involvement of multiple systems, including workforce development, community colleges, the business community, unions, and community groups. It can be difficult to gain the cooperation of all parties needed to enact the type of major changes required by many sectoral initiatives. Such collaborations also require employers who are willing to contribute staff time and financial resources. Indeed, competition among firms can prevent them from working together in a cooperative way. Sectoral initiatives can also require substantial resources to plan and implement effective initiatives. While some have developed innovative programs using primarily public funds, many of the most advanced that are profiled here received significant resources from private foundations to launch and maintain the initiatives. The recent and new DOL grants for high-growth job training and regional employment and economic development may support new programs in this area over the next several years.

2. Incumbent Worker Training

Job training provided directly at the workplace or through employers to their existing workforce is another innovative skill-development strategy. Sometimes known as customized training programs, these are typically state-administered programs that provide grants to businesses to partner with training providers who offer job-specific training for incumbent workers and new hires at a given business (rather than focusing on a industry sector or general job classification). While they vary widely in size and scope, many of these programs are funded through employer taxes (Simon 1997). According to research by the Government Accountability Office, 23 states reported using employer tax revenues in 2002—including UI tax offsets, UI penalty and interest funds, and separate employer taxes—to fund training programs (GAO 2004).

The best evidence on the impact of workplace-based education and training indicates that workers who receive it earn significantly higher wages than those who do not. (Ahlstrand, Bassi, and McMurrer 2003). For example, the wage rate benefit of 40 hours of workplace education is estimated to be 8 percent, which is as large as the return from an entire year of schooling (Frazis and Loewenstein 1999). However, it is also clear that low-wage workers are less likely than higher-wage workers to reap the potential benefits of workplace-based incumbent worker training. In 1995, only 22 percent of workers at the bottom of the earnings distribution received education at work compared with 40 percent of those in the top level (Mikelson and Nightingale 2004).

There are several possible reasons for the lack of employer-provided training for low-wage workers. Businesses are more likely to invest in workers expected to contribute to the long-term profitability of the company—that is, those with longer tenure. Low-skill workers and those at the low end of the salary structure have higher turnover. In addition, businesses are unlikely to invest in training workers who may leave, thereby transferring the returns on their original investment to a new business. In order to qualify for skills-upgrade training, some workers might first require basic skills remediation or English-language training, which are often necessary prerequisites for more advanced, job-specific training. Often these types of services are not allowed under state incumbent worker training programs, which typically provide funding only for technical training.

These challenges notwithstanding, the research findings to date give us strong reason to hypothesize that education and training provided within the workplace context and targeted on entry-level (lower-skilled) workers may improve their earnings potential (Holzer and Martinson 2005). Because the training needs of low-income workers are somewhat different than those of other types of workers, certain program features appear important to include in order to maximize the potential for this to serve as an effective skills-development strategy for this population:

• Paid release time. Many low-wage workers hold multiple jobs and have children, making it difficult to pursue training that occurs outside of work hours. Providing full or partial release time so workers can easily attend training appears critical to attendance and completion.

• Portable training skills. Allowing and encouraging the use of funds to support training projects that can benefit more than one employer can help ensure workers are gaining portable skills. It can also reduce the competitive risks to companies of investing in training if they and their competitors make similar investments.

• Providing basic skills and ESL as part of training. Because many low-wage workers require these type of skills before they can benefit from more technical training, incumbent worker training programs can better meet their needs if they provide this type of service.

• Focus on job quality. Certain types of jobs are associated with higher-than-average wages and provide opportunities for wage progression.

• Targeting low-wage workers. In order to effectively serve this population, it may be necessary to set aside funds or give preferences to training focused on low-income workers.

While most states operate customized or incumbent worker training programs, as shown in appendix table A.8, we identified several that include innovative features designed to explicitly address the needs of low-wage workers, including state programs in New Jersey and Pennsylvania. We also profile a TANF-funded local incumbent worker training program in Florida, which includes a focus on developing quality jobs for low-wage workers. These particular state-operated programs are notable for their scale—they train several thousand individuals per year (although a smaller number are low income)—and have been in operation for several years.

The profiled programs also include at least some of the features noted above that address the needs of low-income workers. For example, all the incumbent worker programs highlighted here require an employer match to receive training funds, primarily paid through providing paid release time to attend training. To address the issue of portability, Pennsylvania’s relatively new incumbent worker training program gives priority to funding training for multiemployer partnerships. It also emphasizes aligning training with steps on a career ladder that offer workers opportunities for advancement. New Jersey established a separate incumbent worker training program that specifically provides resources to employers who provide basic skills and ESL training to their workers, and also gives priority to funding initiatives that serve low-wage workers (see box 11). The Florida program gives “points” in the grant application process based on growth in the target occupations, the existence of career paths that provide wage increases and skill advancement, the availability of tuition reimbursement, and benefits and flexible scheduling.

Box 11 Incumbent Worker Training: New Jersey Workforce Development Partnership Program and Supplemental Workforce Fund for Basic Skills The New Jersey Workforce Development Program provides grants to partnerships of employers and training providers for technical training to incumbent workers at businesses across the state. It is complemented by the Supplemental Workforce Fund for Basic Skills, which provides similar grants for “literacy” training (basic reading and math and ESL). While the state covers the cost of the training (through employer Unemployment Insurance taxes), employers are required to contribute an equal match with their funds going toward employees’ wages while they attend training (usually at the worksite). Because of its basic skills component, the program reaches a range of low-skilled workers, including immigrants and TANF recipients. Employers apply to receive customized training grants, literacy grants, or a combination of the two to provide services to their employees. The program also provides grants directly to community-based organizations and community colleges to deliver basic skills training to unemployed and underemployed individuals in the community. This feature is designed to meet the needs of small businesses that may not be able to meet the employer match because of the small number of workers they employ. Workers in these firms can attend basic skill courses offered in the community.

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