A new National Bureau of Economic Research working paper examining evidence from four randomized evaluations of sector-focused training programs finds such programs generate substantial and persistent gains in earnings for participants.
Sector-focused training programs appear to achieve these earnings gains by moving participants into jobs with higher hourly wages rather than only by increasing employment rates or the number of hours worked among participants, the authors conclude. The sector-focused training programs evaluated in the four randomized controlled trials (RCTs) generated earning gains that ranged from 11 to 40 percent in years after the training.
The programs evaluated in the RCTs include the WorkAdvance model implemented through four providers that target different sectors (Per Scholas and St. Nicks Alliance, both based in New York City; Ohio-based Towards Employment; and Madison Strategies Group, based in Oklahoma City), Project QUEST, JVS Boston, Wisconsin Regional Training Partnership, and Year Up.
Sector-focused training programs (also known as sectoral employment programs) are gaining attention as a promising approach to connecting opportunity youth and adults without postsecondary credentials to higher-wage, higher-quality jobs with potential for long-term career advancement. Sector-focused training has generated interest and investment from the government, private sector, and philanthropy. Many of these programs have strong connections to employers and are focused on the rapidly growing sectors of IT, health care, and manufacturing but also include building trades and other fields. Although they differ in their design and delivery, sector-focused training programs typically screen potential applicants for basic skills and motivation, offer sector-specific occupational and technical skills training complemented with soft skills or job readiness training, and provide wraparound supports and job placement and retention services.
The authors sought to determine how sector-focused training programs allow participants to realize higher earnings and wage gains, finding that:
- Sector-focused training programs are effective in providing adults transferrable, sector-specific skills underprovided by employers, allowing participants to attain employment in higher-wage occupations and industries.
- Sector-focused training programs may be especially attuned to increases in market demand for specific skills and can adapt their programs accordingly. This responsiveness to the market might allow participants to realize higher-wage premiums in expanding occupations.
- Sector-focused training with wraparound supports may be especially effective in breaking down barriers to help nontraditional candidates match to higher-wage jobs.
All the programs evaluated by the RCTs led to gains in certification and credential attainment for participants, and most led to short-term earnings gains. The programs that tracked employment outcomes for participants for longer periods (three to nine years after program entry) showed longer-term earnings gains as well. For example:
- After 18 months, the share of Year Up participants earning at least $15 per hour tripled, from 15.0 to 46.0 percent. Three years after completing the program, they had increased their earnings by 40.3 percent.
- Nine years after completing training, Project QUEST participants sustained an 18.4 percent increase in earnings.
- The WorkAdvance model, which the authors take a deeper dive on to understand the program’s effects on labor market outcomes, increased mean annual earnings by $1,965 two and three years after participants completed the training, 13 percent higher than earnings of the control group. Per Scholas, which trains participants in IT fields, showed particularly strong results, with participants’ quarterly earnings increasing by $1,500 three years after completing training.
Learn more from RCTs of sector-focused training programs:
Tuning into Local Labor Markets: Findings from the Sectoral Employment Impact Study (PDF) (2010)
Escalating Gains: The Elements of Project Quest’s Success (2018)