The Promise of Customized Training 1

The Promise of Customized Training: Evidence from the United States

November 7, 2009

The Promise of Customized Training 2

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 Training 3

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 Training 4

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 Training 5

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 Training 6

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 Training 7

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 Training 8

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

EffectsDifference between employee experience and counterfactual

Customized Training Programs Targeted sectors Features of programs Components of the programs Program Implementation

The Promise of Customized Training 9

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

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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?