Realigning Incentives and Funding to Improve Job Training and Creation

Realigning Incentives and Funding to Improve Job Training and Creation

The expert testimony, research, scholarship, and lived experience collected by the Commission revealed the following:

• Federal Reserve economists conducted an analysis of factors impacting per capita income growth and the growth of metropolitan areas at large for nearly 120 metropolitan areas throughout the U.S. as part of a report for the Fund for Our Economic Future based in Northeast Ohio (Eberts et al., 2006). The researchers identified eight key variables that influence economic growth on the regional level, including a region’s skilled workforce, active small businesses, ethnic diversity and minority business ownership, level of racial inclusion, costs associated with a declining industrial base, income inequality (measured by income disparity and number of children living in poverty), quality of life variables (including universities, recreation, and transportation), and concentrated poverty in core cities (Eberts et al., 2006).
• Although unemployment rates have gone down in the St. Louis region in the past five years, finding employment still remains an issue for many, specifically low and very-low income residents (U.S. Bureau of Labor Statistics, 2015).
• The State of St. Louis Workforce annual survey showed that a shortage of workers with knowledge or skills is the most frequently cited (by area employers) barrier to expanding employment–a trend that has consistently grown over the past several years (St. Louis Community College: Workforce Solutions Group, 2015).
• In the tightening labor market, employers’ flexibility in selecting a qualified workforce has diminished, and they are increasingly required to address training and development of their workforce and/or pay higher wages (St. Louis Community College: Workforce Solutions Group, 2015).
• There are jobs available for people with a lower level of education and work experience, and there exists on-the-job training and tuition reimbursement programs provided by employers, but there also remain barriers to effective job training and creation in the region. Considering the large disparities facing the poor, minorities, and the long-term unemployed, direct job creation may help to generate net increases in labor demand, though with a high price over the short term (Holzer 2012a; King 2011).
• At times, tax credits, such as the Targeted Jobs Tax Credit and the Work Opportunity Tax Credit, have been used to incentivize hiring of certain groups of disadvantaged workers. But research suggests that these public tax credits for private-sector employment have failed to provide necessary returns on investment (Holzer 2012a). Estimated outcomes of these credits suggest positive employment effects on employment while such programs are in place, but few lasting effects for workers over time (Holzer 2012a).
• A review of workforce programs enacted since 2000 has “demonstrated the value of training and workforce services, especially for disadvantaged individuals” (Ridley & Kenefick, 2011).
• One size does not fit all in terms of job training programs and models, especially for disadvantaged men (age 25 or older) (Greenberg 2003; Holzer 2012a). And a consistent thread through previous research indicates that existing employment training programs fail to serve job seekers with particular challenges, including severe mental illness, long-term employment, or very little education (Holzer 2012a; Holzer 2012b).
• Research has identified factors that make a job training program more likely to be successful (U.S. Department of Labor, 2014).

These findings prompted the Commission to draft several calls to action that address incentives for job training and creation.

To that end, the Commission issues the calls to action found below.