Revamping our Workforce Development System: Recommendations for Improvement

One of the most underappreciated government-funded services available in any country is its workforce development system. At its core, such a system serves multiple purposes, which include (but are not limited to): rapid re-employment of displaced workers, enabling and providing for the improvement of the stock of human capital, linking individuals to stable employment at higher, self-sufficient wages, matching employer’s demand for workers with supply, and alleviating systemic poverty in the process. As such, it serves to complement the market and its various needs.

To a large extent, there have been many successes in workforce development. Every year in the United States, thousands of workers are trained and re-employed in a comprehensive network that is unique in structure to each state. I myself have been witness to this. For the past year, I’ve worked for an innovative, private workforce development firm called America Works. While my roles within the company have varied significantly, a large proportion of my time has been spent as a de facto case manager, helping to execute Milwaukee’s local implementation of the federally-funded Workforce Development and Opportunity Act (WIOA). From this vantage point, I’ve gained a lot of insight into how the workforce system as a whole functions. As noted, it has much to admire. But it also leaves a lot to be desired.

The following are my observations to fundamental problems within the workforce development system (with a focus on Wisconsin, though the problems are certainly not limited to Wisconsin), as well as possible solutions to each problem. Ultimately, the goal would be to achieve improvements in the measurable outcomes noted in the first paragraph.

  • Problem 1: A lack of inter-agency communication.  In Wisconsin alone, there are hundreds if not thousands of agencies and actors that serve various roles in the workforce system. These include the unemployment insurance agency, workforce development boards, sub-contracting workforce development agencies, training providers, Trade Adjustment Act (TAA) service providers, Wisconsin’s version of TANF (W-2), the Department of Vocational Rehabilitation (DVR), and a myriad of social service agencies and community service organizations that can offer supportive services. Too often, though, these agencies and individuals within them fail to communicate with the others about the services they offer and how to best contact them. This leads to inefficient service provision and oftentimes a failure to provide timely services to address the needs and barriers of the workforce. Additionally, a lack of communication limits the marketing of services from one part of the system to individuals in another part of the system. Solutions: First, local workforce development boards should publish and distribute updated local workforce development service information. This can take the form of listing local services and the agencies or actors that provide them (as well as their contact information) on their website, as well as publishing brochures that contain this information and distribute them to local actors. Second, actors in the local system should take the initiative to have regular communication with the other actors, and, at the very least, establish a point-of-contact.
  • Problem 2: Too many unfunded mandates from the top-down. In the workforce development system, like in other government capacities, rules and funding flow from the top-down: federal to state to local. The problem with this central planning structure is that rules and regulations at the very top are complemented by further rules and mandates as you go down the pipeline. The result is a myriad of service mandates and reporting requirements that can make effective service provision challenging at the lowest levels of operation. There are countless examples. For example, Wisconsin’s Department of Workforce Development (DWD) requires that clients have up-to-date assessments, which it defines as assessments taken with the past 6 months. This means that, for training or supportive services, clients would have to undergo 3-4 hours of additional testing if their assessments were 6 months 1 day out of date. This has been a consistent dilemma for service providers. Solutions: at higher levels of government, regulations and unfunded mandates should be limited, and regulations should be informed by reoccurring interviews with actors at the lowest level. Additionally, an easy, streamlined feedback system that flows from the bottom up, along with specialized, independent regulatory review divisions within each agency with the power to make changes could be of use.
  • Problem 3: Caseloads are too large for effective service provision. While not every program in the workforce system has “caseloads”, and while each program is different, the general observation by myself and others is that caseloads per case worker remain much too large for the latter to be effective. At least in WIOA, a caseworker is supposed to be the main point of contact for a client, helping to direct the client to resources and continually work with them to steer them into self-sufficient employment. This requires regular follow-up in order to be effective, especially for vulnerable clients, something which is difficult if not impossible with larger case loads. Solutions: more program resources should be used to hire new case managers to bring down average caseloads, and more funding at the federal and state levels should be appropriated specifically for this purpose. Managers at sub-contracting agencies should also be continually monitoring the caseloads of each worker, and re-distributing cases between workers as needed.
  • Problem 4: Overemphasis on work requirements, work search, and rapid work placement, regardless of appropriateness or fit. For the past few decades, American social assistance and workforce development programs have increasingly emphasized work requirements and rapid attachment to work, with many mandating such. While rapid attachment to work can absolutely be a good thing, and is the ultimate goal, these mandates have had unintended consequences. For example, take the unemployment insurance system. Here, workers are required to submit at least 4 work searches per week as a condition of receiving assistance, and are forbidden from denying any employment offer, regardless of the fit for the candidate. This is very inefficient economically. Another example is with the WIOA program. With a constant emphasis on employment, if an individual were to be placed in any sort of short-term employment where they are deemed economically “self sufficient” (using a state-designed “self sufficiency calculator”), they are automatically denied assistance for training, even if this employment is for temporary income-maintenance, doesn’t really pay enough for actual “self-sufficiency”, and isn’t the ultimately employment objective of the participant. This potentially prevents them from learning new skills in an in-demand sector, and short-changes the effectiveness of the program. Solutions: while solutions would vary based on the program, overall I think the “work at any cost” mentality needs a reboot. While employment is indeed oftentimes the best provider of human capital, and while rapid employment placement can boost long-term earnings prospects, it isn’t always the most effective up-front solution. Flexibility is needed.
  • Problem 5: Too many actors that impede progress of service provision. This problem seems to be especially acute in Wisconsin, where, in order for a service to be provided, approvals have to go through multiple layers and agencies, taking far too much time (and, oftentimes, to the point that the problem to be solved becomes irrelevant). For example, in WIOA, in order for funding for a training to be provided, a voucher would have to be created by a subcontracting agency, submitted to the local Workforce Development Board, within which it could go through multiple departments for internal review. Similarly, in order for an exited case to be re-added to a case load, a request would have to be made by the subcontracting agency to the local workforce development board, who would then have to approve it at the local level, who would then have to forward the request to the state, which would then have to ultimately approve the request and manually add it back on the statewide case management system. It’s insanity. Solutions: First, I think there should be fewer layers of agencies; perhaps just the state and local organizations. Second, while I do think states should have general guidelines and performance metrics to hold contractors accountable to, I’m generally in favor of dispensing a set amount of funds to contractors and leaving it up to them to use the funds as they see it to achieve performance metrics (similar to how charter schools operate). Now, I do think there should be random audits and some moderate reporting requirements, to hold organizations accountable. Charter schools have definitely taught us the necessity of this. That said, this structure would give service providers the freedom to innovate to produce better outcomes. With the current system, there are just too many guidelines and requirements to allow much room for innovation.
  • Problem 6:  Sluggish approval process of up-to-date, workforce-relevant training providers. This is perhaps the most frustrating issue I’ve repeatedly encountered as a case manager: the list of “state-approved” training programs in Wisconsin is horrifically out of date, and the process for adding a new training program is a bureaucratic nightmare. In order for a program to be added to this list, the provider has to submit an application to a local workforce development board. Once they approve it, it is then submitted to the state for review and approval. This can take months, if not longer. Worse yet, there is no established process for re-review of older training programs and providers. Solutions: First, if states are to continue using lists for state-approved programs, there needs to be a system of continual review, and staff dedicated to this endeavor. Additionally, the onus should be put on the training providers to regularly renew their applications; and if a set amount of time has passed (say, a few years) without this attempt, they should be automatically dropped from the list. Second, there should be fewer agencies having to review applications, to streamline approval. But perhaps the best solution is related to the solution for Problem 5: let individual service providers independently determine which programs they will fund (using funds provided to them by the state), and hold them accountable for employment results. This would bypass the need for an application and the bureaucracy and delays inherent in the current process, and would likely allow for funding for more up-to-date training.
  • Problem 7: Outdated technology and continued over-reliance on paper. Presently in Wisconsin’s WIOA program (at least in Milwaukee County), in order for an individual to be approved into the program, they must first fill out a lengthy, paper-based registration packet. After another lengthy process of entering data from the paper packets, copies of the packets must be made, organized in a physical folder, and the original sent via courier to the local workforce development board for manual approval. This can take 5-10 business days, oftentimes longer. This is craziness. Solutions: funds should be allocated to hire IT/programming specialists who can create up-to-date electronic registration applications and case management tools across the workforce development system. Additionally, encourage private providers to invest in their own up-to-date technology and be creative with solutions.

This list of observed problems and potential solutions is certainly not exhaustive, but it does give a broad overview of the main issues facing states and a potential platform for further discussion of solutions. Many if not most of these problems will undoubtedly take years to resolve, if they are resolved at all, largely due to the sheer number of actors and special interests involved. Hopefully, however, the initiative can be taken to revamp the system so as to achieve measurable gains in the vitality of America’s workforce.



The problem with the current structure of our safety net programs

All predominantly capitalist societies, in one form or another, have some type of safety net in place. The rationale for them are diverse, but nonetheless compelling. Most obvious is the safety net’s role in preventing citizens from experiencing the suffering of abject poverty, to the extent that their very survival is at stake. Besides this, safety nets play crucial roles in stabilizing the business cycle, reducing structural unemployment (arguably, by allowing people time to find jobs that best match their skill-sets), and boosting productivity by boosting citizen well-being.

America’s complicated web of social assistance programs also serve these crucial purposes, albeit oftentimes inefficiently and rather ineffectively. Multiple programs tend to overlap, and many are desperately under-funded and poorly designed. Yet arguably the most damaging aspect of America’s social safety model isn’t the public element; rather, its the usage of the private sector for purposes of social justice.

Take, for example, the current structure of our post-World War 2 healthcare system. Utilizing tax exemptions, the government essentially subsidizes employer-sponsored health coverage for employees, incentivizing employers and employees alike to obtain generous employer coverage. In other words, the government uses the private sector to achieve the goal of public health. The ACA worsens this via the “employer mandate”, forcing employers with 50 or more “full-time employees” to provide coverage to their employees or pay a penalty. Rather than ensuring skimpy but adequate government insurance for all citizens as a safety net baseline, the government uses the private sector to do its bidding so as to avoid the label of “government takeover of healthcare” and to give the appearance of limited government.

Arguably, the same might be said for the imposition of the minimum wage. Rather than guarantee its citizens a bare minimum financial safety net, it forces businesses to look after employee’s personal well-being themselves (which, obviously, one can make an argument that businesses looking out for their employees and not “taking advantage” of them is a good thing that is to be desired; but the point that the government seems to offload its responsibilities to its citizens by placing it on the shoulders of businesses shouldn’t be automatically ignored).

This (arguably, uniquely American) structure likely has many ill-effects. First, rightly or wrongly, it places the responsibility of minimum standards on institutions whose foremost goal is the achievement of profit (which is not a criticism; it is, rather, the natural aim of businesses) which, although oftentimes in alignment with the goal of worker well-being, is not always so, especially in industries with large quantities of lower-skilled labor. Second, this model inherently has rather large amounts of red tape imposed upon businesses that make it much more difficult to function efficiently and without liability. This can often create scenarios of costs vastly outweighing the benefits, hurting citizens more than it helps. Third, it is an incomplete safety net model, as many people are temporarily (or for longer periods of time) disenfranchised from the labor market, and therefore have little to no interaction with the businesses  the government attempts to use to achieve social goals.

None of this is to say there is zero need for internal regulation of businesses or that businesses can’t play a role in the social safety net. But we should consider the idea that there are many circumstances in which the government ought to play a role in provisioning social assistance that is entirely independent and separated from private business – both for the benefit of business, and the benefit of society as a whole. Right now, in my opinion, we have too much government manipulation of the private sector for social aims – and not so much to show for it.

Achieving a “2020” Vision

I wouldn’t be surprised if people on the internet have already used this play on words, but seriously – why isn’t this a major campaign slogan yet? Even if the vision is inarticulate and 2020 has nothing to do with the objectives, it’s still a catchy phrase.

But I take it one step further by integrating it into a neat little tax plan. Specifically: 20% flat rate. $20,000 standard deduction. By 2020.  It’s that easy.

Here’s how my dream plan would work:

  • Repeal the current income tax code.  Replace with a 20% flat rate applied to all taxable income (including capital income).  This provision contains a lot of benefits, with some amendable drawbacks.  A flat 20% rate would be fair and efficient.  Everyone could calculate it (exactly 1/5 of their taxable income), and its simplicity would destroy the artificial need for tax-preparation services.  This saves the economy billions in both dollars & hours.  It is reasonably fair – proportionally, everyone pays the same, but the rich still pay more in absolute amounts.  It would not change the tax owed by those with capital income too much (already, the top rate on capital gains is around 20%).  Additionally, its simplicity is pro-poor, who often lack the resources for tax consultation services.  Granted, it would represent, in some ways, a “tax hike” for many lower and middle-income people (who previously had lower rates applied to their incomes).  But this can be at least partially (if not fully) offset by a much higher personal exemption and preservation/improvement of a few antipoverty tax-credits (see below).
  • Introduce a $20,000 personal exemption for all households, indexed to inflation.  Starting in 2020, this generous exemption amount would be fully phased in.  It essentially means that not a penny of every dollar up to $20,000 per year will have the income tax applied to it.  In this way, people at or near poverty would not see their tax burdens increased (for many, potentially decreased compared to the current system).  Indeed, it’s at least five times larger than the current personal exemption ($4,000) and provides complete relief to people whose income is nearly twice the poverty line ($11,770/year in 2015).  The exemption amount would be adjusted for non-real increases in income (e.g. inflation) on an annual basis, chained to the index of the candidate’s choice.  Such a high exemption amount should help pave the way for elimination (or near-elimination) of any deductions (especially itemized deductions, such as the mortgage interest deduction, which primarily benefits wealthy taxpayers).  Among the biggest benefits in the vision’s exemption provision is that it allows for some continued progressivity in the tax code.  For example, a person with $20,000 in annual income would pay 0% in income taxes ($20,000 total income – $20,000 exemption = $0 in taxable income * 20% = $0 in taxes = 0% of total income); in contrast, someone with an income of $100,000 would pay about 16% in income taxes ($100,000 total income – $20,000 exemption = $80,000 in taxable income * 20% = $16,000 in taxes = 16% of total income).  So, the effective tax rate is progressive (increases by income), but it is proportionally the same for everyone above $20,000.

And there you have it.  Those two elements – the 20% rate with the $20,000 personal exemption – form the 2020 in the plan.  Benefits, already described somewhat above, include:

  • Simple calculation
  • Elements of fairness (combo of progressivity and equal proportionality)
  • Would likely boost growth & efficiency of tax collections
  • Could very well boost economic growth
    • simple calculation = less time & resources devoted to calculation = higher productivity, savings
    • lower rates boost economic demand and/or supply

Drawbacks include an uncertain impact on the federal budget and the tax burden of the poor/middle class.  For the former, there is reason to think that this plan could well boost tax revenues (thereby helping to close the annual deficit).  The simple calculation of the tax could boost compliance, and the higher growth it could produce would mean higher incomes = more revenues.  Additionally, the elimination of many deductions and credits would save a ton of money; currently, federal tax expenditures total around $1 trillion per year.  As for the burden on the poor/middle class, this plan could entail the loss of several tax credits or deductions that currently benefit them.  To mitigate the impact, some of these credits/deductions could be maintained, but at the threat of making the plan less fiscally sustainable.  Additionally, the impact on those whose incomes are not high but fairly above the poverty line (e.g. those above $20,000, but not too far above) is concerning; it’s unclear whether the proposed tax plan would represent a sizable increase in their tax burden relative to the current system (despite the $20,000 exemption).  People will also scream that this is a tax cut for the rich (who face marginal tax rates of up to almost 40% in the highest income quintiles).  However, it’s important to remember that even the effective income tax rate of the richest in America usually comes in around 20%.  With the 20% rate applied to all of the income of the super-rich (except the first $20,000), their effective rate will basically be 20%.  And with the elimination of some of their favorite deductions and loopholes, it could even represent a tax hike for them.

For too long, our political system has been paralyzed by short-term thinking and an unhealthy attachment to everyday opinion polls.  Now more than ever is the time for policymakers to start projecting clear, attainable visions for the future, with workable frameworks.  When it comes to the tax code, this plan isn’t anywhere near perfect; not by a long shot.  But it’s a place for them to start.




The Endurance and Transformation of American Poverty

For the first time in several years, the September 2014 Census Bureau report on the state of poverty and income within the United States contained encouraging news: incomes were up (slightly), and the poverty rate was down (from 15.0% in 2012 to 14.5% in 2013). It appears that, 5 years since the resumption of economic growth following the Great Recession, growth is finally translating into improvements in basic social indicators. With the output gap (between real observed GDP and potential GDP) now down to around 4% (from a peak of just over 7% of GDP), and with U3 unemployment beginning to approach its estimated natural rate of around 4.5-5.5% (it reached 5.9% in September 2014), the relative bargaining power of workers is slowly but surely improving, allowing for upward pressure on wages and income to materialize.  Despite these improvements, however, poverty as defined by the government’s federal poverty rate remains at multi-generational highs, and is likely to remain elevated for several years to come.

Output Gap

Resources are not being used to their full potential in the US economy

Poverty rate

Poverty rate remains at multi-generational highs

US Unemployment rate nearing estimated "natural rate"

US Unemployment rate nearing estimated “natural rate”


This is depressing, but it fails to tell anywhere near the whole story.  First, we must come to terms with the fact that the actual existence of poverty is all relative, dependent on the constructed definition of the observer.  Since there will almost always be disparities in income (assuming the absence of a genuine proletarian revolution), then there will always be a class of peopled who are “in poverty”, even if their real incomes and living standards would historically have qualified them as middle class or higher.  As such, we can never really eliminate “poverty”, in the sense that that definition is relative and always transforming as absolute conditions shift.    Secondly, the poverty statistics we currently use are woefully simplistic.  Our main poverty metric is calculated based upon the food budget of a typical family using thresholds from 1955 – when the share of income dedicated to food was very different than it is today.  Furthermore, the current poverty thresholds and definitions also do not take into account many forms of governmental assistance (food stamps, Medicaid, etc.) in its calculation that would significantly reduce the number of people listed in poverty.  Perhaps most importantly, though, improvements in product quality and the introduction of new goods & services have zero impact on poverty statistics.  This is important – for though the overall discretionary purchasing power of people is being squeezed (as necessities like healthcare, education, etc. rise in cost), many consumer goods & services are not only far more affordable than they used to be but there is now a greater variety of goods with new qualities and capabilities.  Even as overall discretionary purchasing power is stagnating, quality and variety continue to rise, to the benefit of all consumers.  The stats don’t reflect any of this, hinting that the actual poverty rate might be overstated and that American well-being has continued to improve over time.

Of course, this is in no way diminishing the hardships that those labeled at or near poverty experience within this country.  Indeed, we still are not considering all the variables that impact American poverty.  While consumer goods & services become cheaper and better qualities & characteristics are developed, this comes at the cost of the termination of employment in many sectors, such as low-end manufacturing and various low-skill professions.  Theoretically, these workers could be retrained to perform more higher value-added tasks; in reality, the United States lags in post-secondary completion rates and overall educational quality (mostly at the primary level), making such transitions more difficult.  Additionally, the United States is not particularly generous in offering temporary assistance to those who are unemployed due to market forces (consider the example of the Trade Adjustment Assistance program).  Ironically, this skills shortage in the American labor force and the structural unemployment that results makes it more difficult for consumers to purchase these higher-quality lower-priced goods and services, leading to large imbalances and counteracting many of the benefits of these improved and emerging consumer options.

So, to sum up:

1) Poverty will always exist as long as there are disparities in income (desirable, to a point) and it is (like everything) a human construct.  This does not mean it stays the same; rather, it evolves as overall conditions evolve

2) American poverty metrics are far from giving any rational sense of the true state of poverty in America

3) There are indications that poverty is both less and more widespread than is thought, with positive and negative influences counteracting one another

Certainly, lowering the prevalence of absolute “poverty” would be desirable for society, and not just for the obvious benefit of those so labeled as “the impoverished”.  Greater inclusiveness and higher earnings power boosts the overall macro-economy (consumption, productivity, etc.) and helps to promote social cohesiveness.  But first, we have to acknowledge that not only are the current measurements of poverty severely flawed and in desperate need of an update, but we must accept that we will never completely eliminate relative “poverty”.  As long as it is a relative concept that is allowed to vary as conditions change, it will always be said to exist, even if it vastly different from what it was in earlier periods.  The fight against poverty is therefore a continuous process whose end goal is the indefinite improvement in the living standards.  To say we can ever “win” the War on Poverty is, I think, misleading; because to say we can ever win implies that there is a set limit to how much living standards can ever rise.  Once we accept these points, we can proceed to rethink our goals and proceed to make genuine progress in improving American well-being.