Do Sectoral Employment Programs Work? New Evidence from New York City's Sector‐Focused Career Centers

• DOI: http://doi.org/10.1111/irel.12164
• Date: 01 January 2017
• Author: David S. Berman,Kathryn A. Henderson,Joseph M. Gasper
• Published date: 01 January 2017

Do Sectoral Employment Programs Work?

New Evidence from New York City’s

Sector-Focused Career Centers*

JOSEPH M. GASPER, KATHRYN A. HENDERSON and

DAVID S. BERMAN

While sectoral employment is growing as an approach to providing job opportuni-

ties to disadvantaged jobseekers, there is little evidence on the effectiveness of

these programs. This study estimates impacts on employment and earnings of

three large sectoral employment programs in New York City using a quasi-experi-

mental design and administrative data on earnings. Participants realized increased

employment levels and earnings gains. In addition, participants who received

industry-specific training had greater earnings gains than those who did not.

Introduction

The past 40 years have seen several changes that have caused hardship for

American workers and their families. Workers with no more than a high

school diploma have seen a serious decline in earnings (Greenstone and Loo-

ney 2011; Homer et al. 2008) along with little or no change in the probability

of upward mobility: Among those born in 1986, only 8 percent of those with

parents in the bottom income quintile will reach the top quintile, a probability

unchanged from the 1971 cohort (Chetty et al. 2014). In addition to low

wages, these workers usually experience unstable employment (Mishel, Bern-

stein, and Shierholz 2009; Sum and Khatiwada 2010; Thiess, 2012) and have

fewer points of entry to jobs with the potential for advancement (Osterman

1999). At the same time, many employers are having difficulty filling so-called

*The authors’affiliations are, respectively, Westat, Rockville, Maryland. E-mail: josephgasper@westat.com;

Westat, Rockville, Maryland. E-mail: kathrynhenderson2@westat.com; and NYC Center for Economic

Opportunity, New York, New York. E-mail: dberman@cityhall.nyc.gov.

The authors would like to acknowledge Kelly Richardson of Small Business Services (SBS) at the time this

study was conducted for her assistance in accessing the data for this evaluation. They would also like to

thank Jeff Sorenson and Brian Close of the New York State Department of Labor (NYSDOL), who guided

them through the process of obtaining the Unemployment Insurance (UI) earnings records data. They would

also like to thank Mustafa Karakus of Westat for his comments on an earlier draft of this paper, and Caryn

Nagler of Abt Associates for her editorial assistance in preparing the manuscript. Finally, they would like to

thank Yong Lee of Westat for his assistance preparing the data files for analysis.

INDUSTRIAL RELATIONS, Vol. 56, No. 1 (January 2017). ©2016 Regents of the University of California

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Road, Oxford, OX4 2DQ, UK.

40

middle-skill jobs—those that require more than a high school diploma but less

than a 4-year degree (Holzer and Lerman 2007). Over the next several years, a

number of industries are expected to grow and workers will require specific

preparation and training tailored to meet the needs of employers.

Over the past two decades sectoral employment designed to provide job

opportunities for low-income, disadvantaged workers while at the same time

address employment gaps in certain industries has emerged as an innovative

approach to workforce development. A sector strategy is distinct from a general

job readiness program in that it targets one specific industry and set of occupa-

tions, and then tailors all services to jobs within that industry. These programs

involve the creation of industry-specific training and career-development pro-

grams that focus on training less-skilled and less-educated workers to help them

develop the sector-specific skills and professional networks necessary to con-

nect with and be successful in skilled jobs. Sector-focused employment pro-

grams also focus on improving the employment opportunities for individuals

already within an industry (incumbent workers) and moving workers out of

jobs that offer low pay, few benefits, and little job security (Conway et al.

2007; Elliott and King 1999; Eliot et al. 2001; Maguire et al. 2010). Sectoral

employment programs take a dual-customer approach, serving both job seekers

and employers, and services include robust employer engagement strategies to

help businesses meet their human-resource needs for hiring and retention.

Industries are usually chosen based on their high growth potential, opportunities

for mid-skill jobs that require certifications but not necessarily advanced

degrees, and occupations that have career ladder potential. As of 2010, sectoral

employment programs were operating in twenty-five states (Corporation for a

Skilled Workforce 2010). A 2010 survey found that the number of sector-

focused programs is growing, with 15 percent of programs starting in the previ-

ous 2 years (National Network of Sector Partners 2010). The same survey

found that sector-focused programs are operating in twenty-two different indus-

tries, with healthcare, manufacturing, and construction being the most common.

Although the field of sectoral employment is growing, there is limited evi-

dence on whether these programs can achieve their goal of improved employ-

ment and earnings outcomes for disadvantaged workers. For example, a recent

government-wide review of federal employment and training programs led by

Vice President Biden concluded that although there is reason to be optimistic

about sectoral training programs, “more evaluations are needed to determine

long-term impacts, effective ways to integrate work and training, and career

advancement outcomes”(U.S. Department of Labor 2014:10). This evaluation

seeks to fill this gap by considering the impacts of three sector-focused career

initiatives sponsored by New York City’s (NYC) Center for Economic Opportu-

nity (CEO) in partnership with the city’s Department of Small Business Services

Sector-Focused Career Centers /41

(SBS). These programs serve a large number of individuals across three high-

growth industries in NYC—transportation, advanced manufacturing, and health-

care. This study uses a quasi-experimental design in which program participants

are matched to a comparison group who received nonindustry-specific services

at the city’s One-Stops (which deliver Workforce Investment Act [WIA]

employment and training services), and rich administrative data on earnings to

provide evidence on whether participation in the sector-focused programs

increases the likelihood of employment and raises earnings of participants. This

study also provides evidence on the effectiveness of two distinct approaches to

sectoral employment: a model in which individuals receive industry-specific

training before placement in a job and a less expensive model in which individ-

uals are placed in a job before training. Because sectoral programs are designed

to promote mobility for low-income, disadvantaged workers, we consider

whether participation has effects for subgroups of workers with low human cap-

ital and detachment from the labor market before enrollment.

Existing Research

Several studies have examined the effects of sectoral employment programs

on the labor-market outcomes of participants using both longitudinal and random

assignment research designs. One study evaluated the outcomes for workers

achieved by six sectoral employment programs over a 3-year period using a pret-

est and posttest research design (Conway and Rademacher 2003). The authors

found substantial and sustained improvements in labor market outcomes (Zand-

niapour and Conway 2002). Similar results were found in a separate study that

assessed the outcomes of participants in nine sector-focused employment pro-

grams using baseline and follow-up surveys (Roder, Clymer, and Wyckoff

2008). However, because these longitudinal studies did not include a comparison

group of individuals that did not receive sectoral employment services and train-

ing, it is unclear whether these findings are attributable to the sectoral approach.

A more rigorous study was a random assignment study of three established

sectoral employment programs, focusing on participants who enrolled in 2003

(Maguire et al. 2010). The authors found that in the 24 months after random

assignment, participants in the sectoral employment programs had significantly

higher annual earnings (about $4,500), worked more months (1.3 more

months), and worked more consistently (11 percentage points more likely to

work all 12 months in the second year) than those in the control group. Partic-

ipants in the sectoral employment programs were also more likely to work at a

job that offered benefits, such as health insurance, paid vacation, paid sick

leave, and tuition reimbursement, than those in the random control group.

42 / JOSEPH M. GASPER,KATHRYN A. HENDERSON AND DAVID S. BERMAN