closeup view of students at work in a computer class

Sectoral training programs provide instruction in specific, high-demand sectors such as information technology.

New Study Shows Promise of Workforce Development Programs

By Iris Hentze | Feb. 11, 2021 | State Legislatures Magazine

What if states could jump-start economic recovery while simultaneously helping to reduce economic inequality among residents?

Much has been written about how the COVID-19 pandemic has led to a sharp increase in the national unemployment rate. Less covered, but perhaps equally important, is the disproportionate impact on women, workers of color and low-income workers. Additionally, the pandemic may be expediting the long-standing trend toward automation in the U.S., requiring workers to gain new skills and move into new industries. On top of all of that, it’s clear that economic inequities prevalent before the pandemic are worse than ever now.

The good news is that soon-to-be-released studies have uncovered some of the strongest evidence yet reported in support of workforce training programs, which could provide a valuable solution for states planning their economic recoveries. The Year Up program is a full-time, yearlong workforce training program for low-income young adults. The program provides job training for current high-demand sectors that are projected to experience significant growth in the coming decade, including information technology, financial operations, business operations, software development and sales. Year Up works with young adults from underserved communities who may be outside the “economic mainstream” to help them gain the skills and opportunities they need to build careers in well-paying industries, without having to earn an expensive four-year degree.

Study Backed by Evidence

In a large-scale randomized control trial sponsored by the U.S. Department of Health and Human Services, the Year Up program increased average earnings by 30% to 40%, or $7,000 to $8,000, for participants sustained over time. The trial followed 2,544 low-income young adults in eight different U.S. cities for five years. Beginning immediately upon completion of their one-year training, young adults in the program were earning at least $1,800 more per quarter than their peers who did not participate.

While the full report covering HHS’ five years of findings has not yet been released, Arnold Ventures, a philanthropic organization that focuses on evidence-based policy solutions, points out a number of key highlights in the study beyond the significant earnings bump experienced by participants:

• Given the well-conducted nature of the study, including that it occurred simultaneously in eight different cities, there is strong evidence to suggest that Year Up and similar workforce programs known as “sectoral training” implemented elsewhere would have the same positive earnings effect for other low-income young adults. Sectoral training programs, including CareerWise Colorado, provide training in specific, high-demand sectors.

• With the results of the trial, Year Up joins existing workforce development initiatives such as the Nevada REA Program that have demonstrated significant positive return on investment for taxpayers.

• Finally, according to Arnold Ventures, the cost of the program for taxpayers is less than half the cost of existing programs.

For policymakers working to address both immediate concerns like unemployment rates and longer-term issues such as income inequality in their states, the Year Up program provides an evidence-backed model for consideration. Policymakers can start by asking about the evidence behind existing workforce development programs and whether their state is investing in programs like the Year Up model.

Iris Hentze is a policy specialist in NCSL's Employment, Labor and Retirement Program.

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