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%20[WIA Dislocated Workers]
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 dislocated workers in Washington State.
- The authors assigned dislocated workers to the treatment group if they received employment-related services through the WIA Dislocated Worker Program and exited from July 2005 to June 2006 or from July 2007 to June 2008. The comparison group comprised workers who registered for services at the Labor Exchange during this period.
- The study found that in both the short and long term the employment rate and average quarterly earnings increased for those in the treatment group compared to those in the comparison group. Benefit receipt decreased for those in the treatment group compared with those in the comparison group.
- 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 the WIA Dislocated Worker Program; other factors are likely to have contributed.
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The WIA Dislocated Worker Program was authorized by Title I of the Workforce Investment Act of 1998 and was superseded by the Workforce Innovation and Opportunity Act (WIOA), effective in July 2015.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 administrative data from unemployment insurance records to compare the employment rate, average quarterly earnings, and receipt of benefits for those who participated in the WIA Dislocated Worker Program to those who registered for services at the Labor Exchange.
The study included a sample of 4,296 dislocated workers in Washington state who exited the WIA Dislocated Worker Program from July 2005 to June 2006 and 2,817 who exited from July 2007 to June 2008. The sample of participants was 45 years old on average, half female, and 20 percent racial or ethnic minority. The comparison group consisted of those who registered at the Labor Exchange, were age 18 or older, and exited during the same period.
Findings
Employment
- The study found that, compared to Labor Exchange participants, WIA Dislocated Worker Program participants saw the percentage of quarters employed increase significantly both 3 quarters and 9–12 quarters after program exit—10.1 and 4.7 percentage points, respectively. In addition, average hours worked per quarter increased significantly for the treatment group relative to the comparison group in quarters 9–12 after program exit (35.6 hours) and in the third quarter after program exit (66.4 hours).
Earnings and wages
- In both the third quarter and quarters 9–12 after program exit, average quarterly earnings increased significantly for WIA Dislocated Worker Program participants compared to Labor Exchange participants (by $589 and $850, respectively). The average hourly wage of the treatment group increased by $0.76 in the third quarter after program exit and $1.65 in quarters 9–12 after program exit relative to the comparison group.
Public benefits receipt
- The rate of benefit use among WIA Dislocated Worker Program participants decreased significantly, by 3.1 percentage points in the third quarter after program exit and by 3.2 percentage points in quarters 9–12 after program exit, compared to Labor Exchange participants. The treatment group’s amount of benefit received decreased significantly by $140 in the third quarter after program exit relative to the comparison group’s amount of benefit received.
Considerations for Interpreting the Findings
Although the authors accounted for many underlying characteristics of the groups being compared, their decision to define the groups based on date of program exit rather than program entry is problematic. For example, suppose that the WIA Dislocated Worker Program participants and the Labor Exchange participants were on identical wage trajectories before receiving services from their respective programs, and suppose that the average length of participation in the WIA program 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 be looking at 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 training; it would be caused by the difference in elapsed time (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 the author 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 WIA Dislocated Worker Program; other factors are likely to have contributed.