The Promise of Customized Training1 The Promise of Customized Training: Evidence from the United States November 7, 2009

The Promise of Customized Training2 What is customized training? Sectoral—Organizes firms within an industry to deliver training Demand-driven—Developed to meet the needs of specific firms, conducted with hiring commitments Customized—Training developed or adapted for specific firms, recruitment geared to the firms Collaborative—Provided by partnerships between training providers, firms, and labor market intermediaries raining; costs are shared

The Promise of Customized Training3 What is the rationale for public involvement in customized training? Labor demand—Increased demand for skilled labor, reduced demand for unskilled labor Underinvestment by employers—Discouraged by turnover of skilled employees Underinvestment by individuals —Lack of financial resources and know-how to get the right skills training Collaborations develop slowly—Customized training partnerships emerge slowly in the marketplace

The Promise of Customized Training4 What role does customized training play in WIA? Local decision-making—WIBs are central to WIA system and they have discretion Choice of customized training—At least 1 WIA area in each of 32 states has customized training Encouragement of customized training by DOL —grants provided in SED, SSD, HGTI, CBTI, and WIRED initiatives WIA reauthorization—SECTORS legislation, support for regional workforce development

The Promise of Customized Training5 What have we learned about implementing customized training? Informed sector choice—Need for up-to-date growth information, project responsiveness to economic conditions, commitment to high-wage jobs Productive partnerships—Should build on existing relationships, focus on employer involvement in creating new partnerships Recruitment and engagement—More challenging and requires more resources than policymakers have expected

The Promise of Customized Training6 What have we learned about implementing customized training? Curriculum development and use—Consistent success in customized training initiatives, but many have made modest changes in ‘off the shelf’ curricula Placement and support services— Ensuring that hiring commitments are kept, appropriate jobs are found for trainees not covered by the commitments, and suitable counseling and/or mentoring are provided

The Promise of Customized Training7 What have we learned about the effectiveness of customized training? Current and new employees Factors determining the effects of customized training on employees Features of the 3 sites in the Sectoral Employment Impact Study (Boston, New York, and Milwaukee) Interim estimates of impacts on employment and earnings

The Promise of Customized Training8 What have we learned about the effectiveness of customized training? Experience of Employees  Skills of Trained Employees  Earnings and fringe benefits of trained employees  Other income and services  Taxes paid Context for the Programs  Labor market conditions  Trainee characteristics  Local government policies, rules  Community characteristics Counterfactual  Skills without training  Earnings and fringe benefits without training  Income, services without training  Taxes paid without training Effects Difference between employee experience and counterfactual Customized Training Programs  Targeted sectors  Features of programs  Components of the programs  Program Implementation

The Promise of Customized Training9 What have we learned about the effectiveness of customized training? Employers Factors determining the effects of customized training on employees Results of Lynch study of impacts of employer-provided training on young people Results of Bartel study of ROI in employer- provided training Economy

The Promise of Customized Training10 What are the critical unanswered questions? What is the return on investment in customized training? What is the relationship between program effectiveness and economic conditions? Can effective customized training programs be replicated?