Recommendations and Actions
The future of America's economy depends on the skills of its people. Study after study has reinforced the point that if America is to remain a nation of high wages, it must be a nation of highly skilled workers.(1) The individual futures of American workers also depend on high skills. These skills provide economic security in a rapidly changing labor market. Workers whose jobs required no training suffered unemployment rates three times higher than trained workers.(2) And finally, the average American holds seven to eight jobs over a working lifetime and changes careers once or twice as well.
To foster a healthy and competitive economy and to prepare American workers for jobs in that economy, we must create a new market and reinvent our inadequate education and job training system. We must invent a system that allows all Americans to successfully create and maintain their economic security throughout their working lives.
Current Programs. Unfortunately, the public sector's current job training system is a patchwork quilt of fragmented programs. A 1993 General Accounting Office report to Congress counted no less than 151 separate employment and training programs scattered over 14 federal departments or independent agencies--and the total number of programs is increasing each year.
This patchwork system is funded at $24 billion a year.(3) The money flows to programs in a confusing array of different paths. The federal government directly operates some programs, while state and local agencies operate others. In some cases, funding flows from a federal agency to a state agency. In others, the funds must be passed along to specified local operators. Regulations create even more confusion at the state and local levels. For example, in New York State alone, there are 61 employment and training programs overseen by 16 different state agencies--each with different and often inconsistent regulations.(4)
Despite the large number of programs, the sum of these parts does not create the whole--a comprehensive workforce development system that works for all Americans. Our current national employment and training programs have the following problems:
--- Lack of Information. Very little accessible information on labor market trends or the quality of different training and education courses is available. This makes it difficult for those seeking jobs to make well-informed choices, even if they have their own resources to spend. If job seekers need different services from several programs, they face tremendous barriers in knowing what is available, or what subsidies they may be eligible to receive.
--- Fragmentation. Even if a job seeker succeeds in finding all the necessary services from the 150 programs, bringing together resources is nearly impossible. Even when programs serve the same categories of job seekers, the programs have different eligibility requirements, compliance regulations, program definitions, fiscal systems, and reporting requirements.
--- Inadequate Scale. Existing policies serve a limited number of Americans who fit into the categories in the programs, but not everyone, and not on the scale needed to create a highly skilled workforce. The entire workforce--whether employed or unemployed, young or old, rich or poor, high school drop-outs or college graduates--must be able to obtain employment information, training, and education.
--- Lack of Leverage with Private Sector Money. Overall, U.S. employers invest between $30 billion and $44 billion annually in training.(5) Most public sector programs, however, have little interaction with private sector training. Future public sector training programs should be shaped to coordinate with and stimulate private investment, both individual and corporate, in employee training--to create a new market for job training.
Vision for a Customer-Driven Workforce Development System. The United States needs to create a universal, comprehensive system that allows all Americans to make informed choices about future careers, and that provides all Americans with the tools to realize these choices. This does not mean that government must pay for all of the training and education required. Most of the money invested in training the American workforce will always be private money. Government, however, can help create a market that leverages a wide range of private resources as well as public resources. This system would:
--- use computer technology to electronically knit together the information required for informed choices;
--- let customers drive quality standards for employment training; and
--- free our employment and training professionals from outdated program rules and restrictions.
The solution proposed by the National Performance Review rests on two fundamental premises.
The first premise is that the nation's workforce development system must be universal. The system must help all Americans, regardless of income or work status, get the information and resources they need to build new skills and find better jobs. A universal system cannot be constructed simply by adding new programs, by changing existing programs, or even by folding most existing programs into one broad grant program. The latter approach would make it easier to meet some of the needs of low-income Americans, but would not empower people to find the best education, training, and job placement available at the best price. Furthermore, nothing would have been done for those Americans who are not economically disadvantaged.
The second premise is that the creation of a universal system that works for all Americans goes beyond simply creating programs. The nation must create a functioning market for the acquisition of skills, through which all Americans can get the information and resources they need to improve their careers. The National Performance Review proposes creating one-stop centers for career management to help build that market.
Currently, many states and localities are experimenting with models of one-stop shopping for employment and training. Under Secretary Reich's leadership, the Department of Labor is developing a one-stop center proposal as a key component of its new workforce investment strategy.(6) Although the Department of Labor's one-stop plan is not yet complete, it is clear that major features of Labor's one-stop center proposal will advance reinvention goals by doing the following:
--- providing all Americans with access to high-quality information and assistance in finding jobs and developing skills;
--- creating market incentives for responding to customer needs and choices; and
--- establishing seamless access to comprehensive job training and education.
All Americans will be potential customers of one-stop centers. We envision that Americans will make use of the centers whenever they need information and help in making career transitions throughout their working lives. The centers will be honest brokers of training and education programs, facilitating the new marketplace in skill development and education.
Core Services. One-stop career management centers should be customer driven and entrepreneurial in their operation. The chartering model we propose uses competition or collaboration and standards to ensure high-quality services. A number of career management services should be available at no cost to anyone seeking them. These include:
--- local and national labor market information;
--- basic assessment of customer skills and needs;
--- help in career planning, job search, and placement;
--- three types of information about training and education providers:
- choices, what is available in the local labor market,
- performance information, how the service provider has done at meeting defined performance measures,
- customer satisfaction evaluations, feedback from previous customers about the services they received;
--- information on financial aid and program eligibility; and
--- basic screening and recruitment for employers.
Optional Services. Each center should offer additional services for which fees may be charged. Customers eligible for federally funded employment and training programs would not be charged for the optional services. The specific options will depend upon the needs in a labor market and the creativity of the center operators. These services will be consistent with the fundamental mission of the centers, but will be additional to, or more intensive than, those offered as part of the core services. Some examples of possible optional services include: comprehensive testing, in-depth career counseling, outplacement services for employers, custom-designed recruitment for employers, and custom-designed group workshops.
Charter Model and Standards. The centers should be established and managed through a competitive or collaborative charter with a shared responsibility among the federal government, the states, and the communities. The competition or collaboration should be open to any organization that can meet federally established chartering standards.
The federal role should be to establish national chartering standards, which should emphasize high-quality customer service, provide that core services will be offered to all customers, and ensure public accountability. A nationwide marketing strategy should be developed to provide centers with a common and positive identity and customers with greater access to these centers through easier recognition.
Responsibility for making franchise awards should be delegated to governors and local leaders, such as workforce investment boards. To ensure that market forces help govern quality through customer choice, we recommend that charters be granted to all individual entities or consortia that apply and meet charter standards. Charters will be subject to periodic renewal, and they should be withdrawn for failure to meet standards.
Funding Strategy. Federal funds can support one-stop centers in several ways. First, the appropriation for one-stop shopping proposed within the Department of Labor's budget should be used to build the computer data systems and information technology required to support the centers and to award short-term planning and implementation grants to states to help create the one-stop network. Further, existing funding now supporting core services should, over time, be moved to support one-stop centers.
Second, the centers can also generate revenue by providing optional services to be paid for by the customers with their own resources, or by public funding from other types of employment and training programs for eligible recipients.
Flexibility for State and Local Initiatives. A number of states and communities have been experimenting with different models of one-stop services, and are creating a rich body of experience and knowledge. A wide range of government services are being conveniently offered at shopping malls in Camden County, New Jersey, and the City of Everett, Washington.(7) Some states have focused on the location of job service delivery. For example, Wisconsin's job centers house multiple job training programs under one roof.(8) Other initiatives to co- locate services have occurred in Pima County, Arizona; Anoka County, Minnesota; and Indianapolis, Indiana.
Other projects, such as New York's Gateway initiative, focus on using technology to link training and education information and services, enabling customers to enter the system from numerous locations.(9) Michigan, through the Opportunity Card, and California, through the EduCard, have also explored ways to use computer technology to make information and services more accessible to customers.(10)
Within the framework of broad design principles, states and communities must have the flexibility to build on their current efforts rather than follow a rigid, one-size-fits-all formula. Experimentation at the state and local levels will allow centers to tailor themselves to the needs of the community, learn from each other's successes and failures, and foster innovation.
The Department of Labor should lead the establishment of a comprehensive, integrated program of one-stop shopping centers for career management. Program design should employ the following criteria:
a. Create competition for one-stop awards. Organizations that are monopoly providers can too easily take their customers for granted. These organizations generally have no built-in signals to determine whether programs and services meet users' needs, and there are neither rewards for outstanding performance nor penalties for shoddy service.
Currently, the majority of federal employment and training funds flows through the states to a system of presumed service deliverers-- employment service offices, service delivery areas, vocational education schools. Although some individual agencies are effective, the funding decisions for these agencies are not based on performance. States and oversight boards have limited means of improving the performance of service providers, relying mainly on a few carrots of discretionary dollars available for those organizations that perform well and a few sticks of publishing performance data. Removing key personnel or decertifying existing agencies can be a difficult and highly political process--one that is usually undertaken only in circumstances of extreme mismanagement or fraud.
The proposed funding for one-stop shopping is new money in the system--it does not yet have rules or presumed operators. Now is the time to establish a new competitive system in which funding will be responsive to performance--demonstrated by informed customer choice and competition.
Competition for one-stop awards should occur on two levels. First, the Department of Labor should begin its phase-in of one-stop awards through a competitive process of state awards. Second, the Department of Labor's implementation of one-stop should require governors and local entities to establish a process for selecting center operators that requires operators to compete for customers and that requires operators to meet national chartering standards.
b. Allow a wide range of operators to compete for charters. The competition for charters should be open to anyone, including public, nonprofit, and for-profit organizations that can meet federally established charter standards. The range of potential center operators includes labor unions, local employment service offices, Job Training Partnership Act agencies, Job Training Partnership Act community-based organizations, temporary help agencies, private employment agencies, outplacement firms, community colleges, and more. We recommend that those who best demonstrate the ability to provide basic one-stop services be granted charters.
Creating new incentives for performance is an essential component of one-stop shopping. Requiring organizations, or consortiums of organizations, that receive charters to compete for customers can encourage greater performance. Those providers now performing well will be able to continue. However, competition will also introduce new types of providers and may prompt existing providers to create new types of organizations to provide services--consortiums, umbrella agreements, or nonprofit corporations. In fact, some states and localities have already developed consortiums to enable the delivery of more integrated services.
It is crucial that one-stop centers be honest brokers for their customers. Thus, if an organization provides training, education, or other related services beyond the one-stop center's offerings, the organization must be required to construct what might be called an integrity firewall that ensures customers aren't being steered only to that organization's offerings. This requirement should be a qualifying condition for a charter.
The effectiveness of each center will depend partly on its ability to access different programs and resources. The creation of one-stop career centers will build greater integration, as well as truly providing one-stop shopping for its customers, by the following:
--- ensuring that the implementation of one-stop centers does not create parallel systems of labor market exchange;
--- stimulating the development and expansion of integrated state workforce development councils;
--- encouraging the coordination and consolidation of multiple local oversight boards;
--- providing relief from burdensome rules and regulations; and
--- building system capacity.
a. Ensure that one-stop centers do not create parallel systems of labor market exchange. It is anticipated that virtually all employment service offices across the United States, and many organizations offering services under the Job Training Partnership Act, will seek one-stop charters. In addition, many communities may see labor unions, community colleges, community-based organizations, and businesses applying for charters to operate local one-stop outlets. In some communities, consortia of groups may come forward to apply for charters.
Under the one-stop proposal, the public funds that currently finance core job-finding services will be distributed among the organizations chartered to operate one-stop centers. Funding of one-stop centers would be based upon performance elements such as quality of service and the numbers of customers attracted. Information would be made available by the workforce investment board on the performance of the various one-stop centers to help citizens make informed choices among them. In this way, the advantages of multiple providers will not result in the waste and duplication of systems serving the same public purpose.
b. Stimulate more effective state governance of workforce development. The current federal system that divides employment and training programs into categories of 151 different program has, not surprisingly, spawned a patchwork, fragmented system of oversight and policy direction at the state level. State-level oversight bodies have been established for the Job Training Partnership Act programs, for vocational education schools, for the unemployment insurance system, and for community colleges. Each is responsible for a specific program, and none has responsibility for overall workforce development.
In a positive trend, however, recent Job Training Partnership Act amendments encourage states to create comprehensive human resource investment councils. A number of states have consolidated education and training oversight boards, or created so-called super boards, or both, to oversee a comprehensive workforce development system for their states. For example, New Jersey has created a State Employment and Training Commission, which connects the Job Training Coordinating Council, the State Council on Vocational Education, the Adult Education and Literacy Council, the private sector, and labor organizations.(11) The National Performance Review recommends that states demonstrate that they have effectively coordinated oversight of workforce development systems in order to qualify for one-stop funding.
c. Encourage more effective local oversight of workforce development. Competent local labor marketwide boards will be essential to oversee the career management centers and to generate an effective local workforce development system. As discussed, current programs have created fragmentation at the state governance level. They have also caused fragmentation at the local governance level. Today, there are not only separate local oversight bodies for different employment and training programs--often there are different oversight bodies for the same program even within one local labor market area. For example, the metropolitan Detroit area has seven separate oversight bodies for Job Training Partnership Act programs.
Bringing together multiple programs and multiple funding sources through effective local labor market boards will be crucial for the success of career management centers. Therefore, efforts to reform local program governance structures need to be encouraged. The National Performance Review recommends that, to qualify for one-stop awards, states must commit to creating better systems of local oversight.
d. Provide relief from burdensome rules and regulations. The fragmentation of federal funding sources creates burdensome and expensive administrative efforts at state and local levels. For example, several agencies in Rochester, New York, recently decided to conduct a joint marketing campaign for a new integrated training initiative. Although one agency was willing to pay all of the $15,000 needed for the campaign, its funding restrictions would not allow any agency money to be used for projects that would reach anyone outside the specified target population. Therefore, the agencies had to go through five different administrative funding procedures to collect the $15,000. The project director estimates the administrative costs of this requirement exceeded the $15,000 used for the marketing campaign.(12)
Gaining greater operational flexibility is more important to many states and local program operators than the possibility of additional funding from one-stop awards. The recommendations elsewhere in this report on creating a boundary-spanning workforce development system address methods of more permanently providing flexibility by standardizing terms, and standardizing fiscal and administrative systems across all federally supported training programs. In addition, the Department of Labor's proposal on one-stop centers should seek broad authority to waive certain rules and regulations as a means of providing more effective services, promoting the integration of separate funding streams, and implementing a one-stop system.
The Department of Labor should grant to states the additional flexibility needed for integrating programs without necessarily granting funds from the initial round of one-stop center awards. This will allow the flexibility achieved through waivers to go beyond the few states receiving initial one-stop awards. The Department of Labor legislation implementing one-stop centers could also allow a process whereby certain laws and regulations consistently identified as needing waivers would be permanently changed or eliminated.(13)
e. Build greater system capacity. Competition, greater programmatic flexibility, and increased customer choice and feedback are important measures for creating high-quality one-stop career centers and generally improving the overall effectiveness of the nation's workforce development system. However, just as the importance of the private sector investments in workforce skills and education is recognized, it also is important to invest in the skills of those delivering public sector services. The Department of Labor should provide in its implementation of one-stop centers the resources for capacity building, including methods of circulating information on best practice and the availability of staff training resources at the state and local levels.
3. Market Incentives.
A fundamental design principle of the one-stop career management centers is that operators must be both allowed and encouraged to generate and keep fee-for-service revenue (from those customers not eligible for federally funded employment and training services) to complement the public funds being devoted to the centers.
This principle is important for two reasons. First, the career centers need to serve the entire workforce. Federal investment can leverage private spending for career management services and make possible a universal system. Second, market incentives will allow centers to excel, to be fully responsive to the market, and not be forced to limit their customer services to those activities funded with tax dollars. Allowing centers to retain income increases the likelihood of long-term success. The greater the range of high- quality service that can be offered, the more reasons potential customers will have to use the centers.
For this strategy to work, legislation must explicitly permit centers to accept and keep fee-for-service revenue. In addition, some states and local jurisdictions may also need to take legislative action to allow public agencies to retain program income. All program revenue obtained by public or non-profit center operators should be required to be used only for program purposes.
Implementation of these recommenda-tions will replace the fragmented current system with a workforce development system organized around the needs of customers. Implementation will improve the quality and availability of information, allowing customers to make informed choices. Implementation will also introduce performance-based competition in the award of one-stop franchises. Finally, implementation will leverage private and public resources to better achieve the scale needed to help create a truly universal workforce development system.
The fiscal impact of implementing one-stop career management centers should be considered within the context of the administration's workforce investment strategy. Additional resources for training and educating the workforce can result in a stronger economy--if invested effectively. The recommendations are intended to ensure that both existing resources and potential future investments in workforce development are used as effectively as possible.
1. See, for example, Commission on Skills of the American Workforce, America's Choice: High Skills or Low Wages (National Center on Education and the Economy, June 1990); and Carnevale, Anthony, America and the New Economy (The American Society for Training and Development, 1991).
2. Amirault, Thomas, "Job Training: Who Need It and Where They Get It," Occupational Outlook Quarterly (Winter 1992-1993), p. 19.
3. U.S. Congress, Senate, Committee on Appropriations, Subcommittee on Education, Labor, and Health and Human Services, "Multiple Employment Programs: National Employment Training Strategy Needed," testimony by Clarence C. Crawford, United States General Accounting Office, June 18, 1993.
4. Telephone interview with Michael Vitagliano, Executive Director of the New York State Human Investment Sub-cabinet, July 20, 1993.
5. U.S. Congress, Office of Technology Assessment, Worker Training: Competing in the New Economy (Washington, D.C.: U.S. Government Printing Office [GPO], 1990), p. 15.
6. Doug Ross, Assistant Secretary of Labor for Employment and Training, has been instrumental in developing the one-stop proposal for Secretary Reich. Grace Kilbane, who has taken the lead within the Department of Labor for the one-stop proposal, has also greatly assisted the National Performance Review as well. Among the many other people at the Department of Labor who have helped hammer out the one-stop proposal, we must especially mention Pat Fahey, Geri Fiala, Carolyn Golding, Kitty Higgins, Susan Schlickeisen, Mary Silva, and Ray Uhalde.
7. Interview with Louis Bezich, Chief Operating Officer and Treasurer for Camden County, July 28, 1993. See "The Camden County Store: An Initiative in Customer Service" for further information. Also, interview with Steve Breeden, Director of Communications and Media Relations for the City of Everett, Washington, July 28, 1993. The services that Everett's city hall at the mall currently offers include: voter registration, water payments, job listings, animal licenses, parking permits, and listings of weekend events, among many others.
8. See Becker, Gene, Wisconsin's Job Centers: One State's One-Stop Shop (National Governors Association, undated).
9. Interview with Michael Vitagliano, Executive Director of the New York State Human Investment Sub-cabinet, July 19, 1993. For further information, consult Computer Gateways: Information Exchange Partnerships in New York State (April 1993).
10. Information on Michigan's opportunity card system obtained from Larry Good, Corporation for a Skilled Workforce, Ann Arbor, Michigan. Information on California's EduCard obtained from Fred Best, Executive Director, Adult Education Institute for Research and Learning, Sacramento, California.
11. Telephone interview with Bill Tracey, Executive Director of the New Jersey State Employment and Training Commission, July 20, 1993.
12. Telephone interview with Michael Vitagliano, Executive Director of the New York State Human Investment Sub-cabinet, July 20, 1993.
13. See National Performance Review Accompanying Report Strengthening the Partnership in Intergovernmental Service Delivery (Washington, D.C.: GPO, September 1993). This report describes a bottom-up waiver process that would facilitate the integration of funding from a number of federal agencies. For instance, this process would allow states and localities to combine funds from the Departments of Labor, Education, Energy, and Health and Human Services to facilitate one- stop centers. One-stop centers need the ability to integrate education and training programs across funding streams.
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