Research

Executive Summary

Workforce Development, Inc.

TRAINING INVESTMENT RECORD
Methodology

Each year, the Board and staff of SE MN Workforce, Inc. (WFDI) reviews the placement outcomes of the training investments made in the previous year. Each person's career goals are charted according to a self-devised occupational index - thereby allowing us to compare results across occupational clusters and amongst the various schools offering training in our area.

We refer to our occupational index as the "WOW code", in that the numbering system is adapted from The World of Work Inventory; this allows our counselors to reference, or "map" customer's assessed career interests in light of our investment study.

For this study, a student was counted if their activity status was that of "classroom training" anytime between July 1 and June 30. The dollars attributed to the investment represents only those funds committed by WFDI, and may not equal the total cost of the course. However, if the course started prior to July 1, the dollars spent in the previous year were added to this past year's investment to give a more true picture of the total investment made per placement. The concept of "Return-on-Investment" (ROI) has been used by WFDI for the past eight years to help measure the efficiency and effectiveness of our training efforts. The ROI cited is calculated by : adding the welfare savings due to placement plus the income taxes paid due to placement and the Social Security contribution paid (.0755 employer's share), all divided by the overall cost of training. Training costs are calculated as the total cost of training for all students, including those that are not placed. The ROI is reported two different ways: one represents the tuition costs only compared to the return over a period of 90 days post-placement; the other is an annualized return that includes the cost of training plus the prorated portion of overhead assigned by WFDI for all adults.

This study involved 1353 adult students, and a classroom training tuition investment of $1,506, 518.19.

Summary

Once again, the study underscores the importance of classroom training in preparing for a living wage job. However, the data continues to suggest that quality jobs can be secured with shorter-term industrial certification training yielding a much greater return on the public's investment. Extensive research on the part of the prospective student and a thorough assessment seem to be a critical factor in successful career planning. From a consumer's standpoint, and from the perspective of the average taxpayer, it would seem that a proliferation of training providers has created an expanded array of training options and has yielded higher returns. The trick now is to be able to navigate the myriad of options available in the most informed, yet least frustrated way possible. The role of the "honest broker" of regional workforce development services has obviously taken on added significance, and one that well suits Workforce Development, Inc.

Local Policy Implications

Key to making a quality investment is the successful completion of the course, and the realization of a training-related placement. The agency needs to continue its practices of hiring and retaining excellent caliber career counselors, while providing ongoing training and technical assistance on the latest techniques, tools and labor market information.

In reviewing the data for all occupations/courses from the last three years, only one field of study seems to yield no positive results, and that is "Data Entry". Common sense suggests that there are very few, if any, jobs available anymore that require only basic data entry skills. Measurably, we have sponsored eight people in the last three years with that expressed goal, and none of them have found a job. It would be recommended that no individual be funded with the simple career plan of "Data Entry" in the future.

One trouble spot appeared this year with a particular grant for nontraditional careers for woman wanting to enter the "Building Maintenance" career in the Albert Lea area. The area of building maintenance has not been a problem in the past, but the ROI yield was particularly low this year due to much higher than expected costs from the vendor. It is suggested that a different payment method be explored in the future.

Legislative Implications

Much valuable data is currently available within the WSA's regarding the training investment of public sector funds by the local Workforce Boards. In the absence of any universal "Consumer Reports" for all citizens, the local Workforce Boards ought to be looked to as the coordinator of Regional Workforce Development Planning.

Given the documented Return-on-Investment that job training represents, the legislature ought to consider investing even more resources into classroom training. First, it would be important to figure out how much is needed to maintain the current system of quality career planners. Then we would need to structure any additional grants so that at least 30% of all adult participants are able to enroll in training is each WSA.

The concept of local control of well-trained "honest-brokers"/career planners has worked so well to maximize the Return-on-Investment and course completion rates, that the State ought to consider utilizing the system for ALL publicly-funded higher-ed services, including Carl Perkins grants.

If data such as this were compiled by all WSA's and it were combined with the most recent/relevant Labor Market Information and Economic Development data, the returns could be even more astounding. A good place to start with the coordination of Workforce Development and Economic Development services would be to establish regional data clearing-houses and a common marketing approach to employers. These activities could easily take place now without a lot of governance or structural changes; a simple data/marketing account for each area would get it off the ground.

Significant Findings

A record 1353 students were involved in classroom training last year, representing 31.5% of all adult participants. This level of training emphasis is second highest of all WSA's in the State, compared to a high of 35%, and a low of less than 5%.

In the 8 years that WFDI has kept Return-on-Investment (ROI) records, never before have we achieved an overall rate in excess of 500%! This year's record 504% was achieved, in-part, by a 1250.6% ROI for those sent to classroom training.

49.3% of all students attended a MNSCU training site this past year; 51.2% the year before, and 53.9% two years ago.

The field of study commanding the most enrollment continues to be the area of Information Technology, at 53.8% of all students, compared to 56.8% and 35.9% for the past two years; Healthcare remains second at 14.9% of all students.

The highest average wage at placement was with the Science and Engineering Professional fields at $14.25 per hour, followed by Management and Accounting at $13.88, and Vehicle Drivers at $12.74; the lowest wages were with Clerical training at $9.31 per hour and Service Technicians at $9.47.

The top five individual occupation wage rates realized were: Marketing Researcher, Occ/Physical Therapist, Horticulturist, Civil Engineer and CNC Operator ($18.50 to $30.00 per hour). The lowest five occupations were Farmhand, Forester, Counselor, Building Maintenance, and Chiropractic Technician ($5.50 to $7.50 per hour).

The highest placement rates for all classroom enrollees were the Information Technology fields at 86.1%, Service Technicians at 84.6%, and Manufacturing specialists at 83.9%; the lowest placement rates were for human Service Professionals at 72.0% and Vehicle Drivers at 75%.

The highest annualized Return-on-investment (ROI) for all fields was once again the area of Information Technology, this year at a record high 1,679.6% - owing to its moderately fair wage, placement and completion rates, compared to its high level of welfare savings at placement and its very low average cost ($845.30).

Despite the high wages for Science and Engineering Professionals, and its very high completion and placement rates, its excessively high cost of training ($2,679.91) and very few welfare recipients attending contributed to the lowest ROI at 187.2%.

132 different training institutions were utilized in training the 1353 students this past year, up dramatically from 83 schools last year, and 47 schools two years ago. Nearly all the additional schools have been private and providing computer training, the reasons for selecting these alternative training sites are most often reported to be "availability" (unique course offerings) and "accessibility" (classes starting when they are ready to learn, and at the time of day/location that is most convenient). The role of "honest broker" in conjunction with the increase in dislocated workers has been the main contributor to the proliferation of training sites.

While the overall annualized Return-on-Investment (ROI) was 1250.6% for all students, the ROI for all MNSCU campuses was 924.8%, compared to 2,084.0% for all Private Vendors; WFDI itself (as a North Central accredited, HESO registered, and WIA certified school for IT training) yielded a 2,955.7% annualized ROI.

The average number of hours of instruction at private vendors was only 333 hours, vs. the nearly 1,000 hours at MNSCU institutions, and the 797 hours as an overall average. The shorter-term training is the apparent preference of a growing number of prospective students; obviously the short-term training is industrial certification-based, while much of the longer-term training is credit-bearing and degree-based.

The top 20% individual wage-earners went to school for 561 hrs of instruction, and we invested only $537 in their education, while the lowest 20% wage-earners went to school longer and cost more - 852 hrs of instruction and $1,953!

One interesting fact is that the average number of instructional hours attempted for course completers was 629 hours, while the average attempted for non-completers was 819 hours. Apparently, training in excess of 629 hours (approximately 16 weeks) bears diminishing returns.

The average Return-on-Investment of our public training resources is 39.9% lower for those who do not complete their training.

Course completion rates and the training-relatedness of the placement may be the ultimate factors to successful public training investment (see attached matrix), and the key to these factors comes down to career planning. All students sponsored by WFDI, regardless of funding stream, receives a thorough vocational assessment and is required to do pre-admittance homework on their chosen occupation. It's interesting to note that the published non-completion rate for public sector higher-Ed has been acknowledged to be as high as 42% for all attendees - while WFDI's non-completion rate is a low 17%. Quite a feat when one considers that nearly all are economically disadvantaged with a host of barriers to success in front of them.

Training Relatedness and Course Completion Matrix