The Workforce Investment Act: Implementation Experiences and Evaluation Findings

3 - The Use of Market Mechanisms

81 3 the Use of Market Mechanisms Christopher T. King University of Texas at Austin Burt S. Barnow George Washington University This chapter is based in part on a larger study of the implementation of WIA conducted with colleagues in eight states and 16 localities from 2003 to 2005.1 After presenting background on WIA and the study, we present key results concerning one of the more important and controversial aspects of the act: increased emphasis on market and market-like mechanisms in the delivery of workforce services in the United States. We then discuss these findings and wrap up with a series of conclusions and recommendations, both for informing the WIA reauthorization process, which is now under way, and for providing guidance to the European Social Fund. BACKGROUND WIA has been described as a “major overhaul” of the nation’s approach to employment and training, as a “fundamental departure” from previous programs, and as “the first significant attempt to retool” these programs in two decades (Barnow and King 2003). The act institutionalized changes in workforce policies and practices that began to surface as a handful of early-implementing states (e.g., Florida, Indiana, Kentucky , Louisiana, Pennsylvania, Texas, Utah, Vermont, and Wisconsin) operationalized the act’s provisions beginning in July 1999. These and other states had developed and implemented One-Stop Career Centers prior to the 1998 enactment of WIA legislation, some of them, such as 82 King and Barnow Wisconsin and Pennsylvania, as early as the mid-1980s. Major changes authorized under Title I of WIA included • fostering more coordinated, longer-term planning for workforce development programs; • institutionalizing One-Stop Career Centers as the cornerstones of the local workforce delivery system; • sequencing job seekers’services from core to intensive to training services; • implementing universal eligibility for core services via OneStop Career Centers; and • increasing reliance on market mechanisms. The last set of changes, market mechanisms, is the main focus of this chapter. thE WIA StUDY The WIA study was conducted using the field network methodology developed over several decades for use in understanding program implementation.2 In each of the participating study states, a spectrum of workforce system actors was interviewed. Using a structured interview guide, elected officials (e.g., legislators), policymakers, agency officials, program directors, community and technical college administrators, business and chamber of commerce leaders, state and local Workforce Investment Board (WIB) directors and staff, One-Stop Career Center directors and staff, advocates, and workers in community-based organizations were interviewed. In addition, leaders and staff of workforce development, education, and related programs were engaged in discussions to obtain a broad perspective of workforce development activities. A number of researchers have examined WIA, most focusing on early WIA implementation experiences across a broad range of issues. Employment and Training Administration staff began conducting internal implementation studies of WIA in 1998 and 1999. The Employment and Training Administration (ETA) also funded a two-track national WIAimplementation study by Social Policy Research (SPR)Associates that featured visits to 16 states and numerous localities and One-Stop The Use of Market Mechanisms 83 Career Centers between 1999 and 2001 (D’Amico et al. 2001), as well as assisting the ETA with consolidating WIA implementation data for all 54 states and territories. Buck (2002) of Public/Private Ventures also studied early WIA implementation in five cities, focusing largely on how new market mechanisms (e.g., individual training accounts [ITAs], performance measures) and One-Stop requirements affected workforce programs and participants. Frank et al. (2003) of the Center for Law and Social Policy analyzed national data for the 2000–2001 period, comparing early participation, demographics, and services under WIA with similar data for the final year of JTPA. The ETA also funded Administrative Data Research and Evaluation (ADARE) project researchers from several universities and private, nonprofit research institutions who examined early participation and service patterns, and WIA performance measures (Mueser et al. 2003; Stevens 2003) and estimated quasi-experimental net impacts from WIA participation on employment and earnings (Hollenbeck et al. 2005). Finally, O’Shea and King (2001) explored early experiences with WIA and related programs in three states (Tennessee, Texas, and Washington ) and at least two local workforce investment areas in each as a pilot for the eight-state WIA study. They focused on problems and opportunities experienced by these states while implementing new WIA features (e.g., eligible training provider lists [ETPLs], service sequencing ) and also explored ways...