In his 2015-2016 Budget Summary, Governor Jerry Brown elevates the issue of poverty in California.
Over the next few months in a series of postings at Fox & Hounds, we will address what we’ve learned from California’s previous efforts to reduce poverty, in such areas as adult education, welfare reform, reducing teen pregnancy, and job training. This initial posting will start with a very quick overview of the anti-poverty impacts of job training efforts funded by the federal and state government since the 1960s.
At the start of this series, a few words on two characteristics of poverty in California. First, poverty rates have not been static , but have fluctuated over the years. The chart above (click to enlarge) was prepared by Jared Sanchez of the University of Southern California. Mr. Sanchez is a colleague of Professor Manuel Pastor, a leading researcher in our state on poverty issues for several decades. As the chart indicates, the poverty rates for all ethnic groups in California have risen and fallen since 1990, largely in line with the state’s general economic growth. The exception has been since 2008. The rates overall and for different ethnic groups jumped during the Great Recession, and have remained at high rates, even as the California economy has rebounded since early 2010. We will return to Mr. Sanchez’s data later in this F&H series.
Second, poverty in California has not been ignored. California state government has had a steady stream of proposed initiatives to reduce poverty over the past 80 years—even if most of these never got off the ground. California has a rich history of anti-poverty thought and actions that should inform our policy discussions in 2015.
Starting with job training as an anti-poverty approach, we need to go back to 1962. The Manpower Development & Training Act (MDTA) was the first of the major 1960s government funded anti-poverty/job training efforts–a federal program enacted in 1962, that provided training funds throughout California. MDTA was a response to fears that automation was eliminating jobs, and belief that workers needed new skills to compete in the emerging technological and service economy of the 1960s and 1970s (sound familiar). It funded a variety of classroom instruction and on-the job training, not very dissimilar from the training offered today.
MDTA was soon joined by four training programs connected with the federal War on Poverty: the Concentrated Employment Program, New Careers for the Poor, Job Opportunities in the Business Sector, and the youth-focused Neighborhood Youth Corps. In 1974, these government job training programs in California were consolidated under the Comprehensive Employment and Training Act (CETA), and this consolidation has continued under different names (though very similar forms) first under the Job Training Partnership Act in 1983, and in 1998 under the Workforce Investment Act.
Literally hundreds of studies have been conducted over the past 35 years on the wage and anti-poverty impacts of training programs. In 1994, when economists Lawrence Katz and Alan Krueger led a US Department of Labor review of studies on the economic impacts of training programs, they were able to identify more than 100 serious nonpartisan studies for review. Since their review, there have been at least 100 additional studies conducted.
For thinking about anti-poverty interventions going forward, the studies suggest two main dynamics. First, across all programs, job training participants show modest employment and income gains in comparison with similarly situated workers not participating in training. Second, among effective individual programs the income gains are higher, though not usually moving participants very far above the poverty line.
The first serious large-scale studies of job training were conducted under CETA, using the USDOL-funded Continuous Longitudinal Manpower Survey (CLMS). CLMS tracked training participants for a number of years after their completion of training. In 1982, the Congressional Budget Office, using CLMS, examined wage information on 3,200 participants over 24 years of age who had entered CETA training between January 1975 and June 1976, and had stayed for at least seven days. Data on a comparison group of 30,000 workers was obtained from the March 1976 Current Population Survey. The CBO found that for women, CETA increased average post-program earnings by $800-$1300 per year (mainly due to an increase in time worked), while the gains for men were more modest.
Reviewing the CBO study as well as others, in 1984 Gary Burtless of the Brookings Institution offered the following observation on job training as an anti-poverty strategy that still holds true. Job training programs ”have not eliminated or even substantially reduced poverty among the working age population, but they have made a modest difference in the lives of many who participated in them. “He added that “proper training can occasionally turn a welfare mother into a computer technician. But there is no magic training course that can guarantee every welfare mother self-sufficiency in a well-paid job.”
For the Job Training Partnership Act (JTPA), the impact studies became more sophisticated with the use of random assignment. The US DOL sponsored a multisite, multiyear National JTPA Study to assess training impacts. Applicants at 16 local JTPA programs across the nation were randomly assigned to either a participant group or a control group. The National JTPA Study gathered information on the participant and control groups enrolled, and wages were tracked for 20,000 participants. The adult JTPA participants averaged wages that were higher than the control groups, though not dramatically so—male adult JTPA participants earned an average of $1,599 more than control group members and female adult JTPA participants earned an average of $1,837 more than control group members.
More recently, under the Workforce Investment Act (WIA), several major studies have been undertaken of program impacts. A 2009 paper by the prominent researcher in the workforce field, Dr. Kevin Hollenback of the W.E. Upjohn Institute, examined WIA programs in three states. Dr. Hollenback found both short-term employment and wage impacts to be positive among all sites, with quarterly wage gains among participants differing among the sites but in the range of $2200-$2800 annually for the two better-performing sites. Jeffrey Smith of the University of Michigan reported similar findings in a 2013 paper, Does Federally-Funded Job Training Work? Smith along with several other researchers on his team finds positive, if modest, earnings and employment gains over the 3 years following program registration for adults served by WIA.
So what can we take for California anti-poverty discussions in 2015? Job training is certainly one element of any California anti-poverty approach. But alone it will have very limited impact on poverty rates, and needs to be augmented by other shifts in social and economic thinking and action.