Thursday, February 28, 2013

How Improved Cost-Benefit Models And Labor Market Intel Are Changing Workforce Investment

By Rob Sentz

The skills gap and public scrutiny on the true effectiveness of the workforce investment system are two major hurdles confronting WIBs in 2013. In both cases, we would suggest that the right data is the best ally.

We live in a world of Big Data, which means we live in a world of way too much data. Big Data is an ocean with no reference points, or dense fog that induces decision paralysis. Or better yet, it’s a file cabinet we’ve been stuffing for years. We know it’s full of good information, but where should we even start?

The first step is realizing that just having data isn’t the goal. We all have those scary file cabinets sitting around. Those warehouses of information do nothing for us, unless, of course, we know how to get in, find what we need, and get back out – quickly. The point of the file cabinet is to create any easy reference system that we can use to immediately call up the important details essential for answering an important question. Once we can start to do that, data moves from a scary beast to a powerful ally that will vastly improve our decision-making process.

From a workforce development perspective, the file cabinet in question is the massive amount of information that the U.S. collects on employment and human capital, otherwise known as labor market data. And harnessing that data is really all about:
  1. Being smarter and more informed as we address employers’ workforce needs;
  2. Establishing the right vision for the region and getting employers, educational institutions, and economic developers to buy into that vision; and
  3. Helping the broader community understand the role that the workforce system has in driving regional economic prosperity.
There are two critical ways that WIBs can harness Big Data to get more people ready for the right careers, establish focus, and change perception.

Labor Market Intel

If there is one thing that keeps business leaders up at night, it’s apparently their ability (or inability) to find and keep skilled workers.In November 2012, CareerBuilder surveyed over 2,700 hiring managers about their top staffing challenges for 2013. Nearly 30% said that finding skilled applicants was their biggest problem. Another 13% said that they don’t have the budget to effectively recruit, and 33% are afraid that they won’t be able to retain their best workers.

Here at EMSI, we believe strongly that WIBs are in a great position to help with these issues using the right information. The file cabinet is there. WIBs just need to access it to help troubleshoot the key issues that employers face.

The first step workforce boards can take is to realize that many employers simply aren’t familiar with the labor market. Labor market data is extremely useful for expanding one’s perspective on hiring and recruitment because the data can shed light on the fundamental economic realities of the region. Labor market data is just a tad difficult to get at, which is why EMSI exists. As a WIB sits down with an employer and reviews the data, it could actually produce some big “aha” moments that businesses have never considered before. This would include:
  • Stats on their industry’s overall performance in the region,
  • Competitors (other businesses within the same industry),
  • Occupational wages, which will give them a better sense what a typical person earns in the community,
  • Regional growth, which would provide an overall sense of the general direction of the local economy.
  • Local training providers, who might be producing talent they could recruit, and
  • Compatible occupations that might be indicate workers they could hire because of similar knowledge and skills backgrounds.
Second, as WIBs have these sorts of conversations with employers, the next steps might come easier or at least be greeted with greater clarity.
  • Does a company need to pay a bit more to improve its number of qualified applicants? What is that ideal wage?
  • Does a company need to invest more in training and how can the WIB help?
  • Does the business need to think about recruiting a different type of worker, and is there an industry that has a lot of these workers?
  • Is there a program at a local college that would help provide workers with the right skills?
These are all they types of questions that a WIB can help with by tapping into the huge amount of data available.

Finally, many WIBs have been working with this type of strategic data for much longer than the private sector and will have a better grasp of how to use and interpret it. This can ultimately help the workforce system become a trusted adviser and open doors into much more meaningful conversations about what can be done to find, develop, and retain those workers. Furthermore, WIBs that are good at this will put themselves into a key position when other companies come knocking on the region’s door.

To see how this can really work, please read this case study by Scott Sheely, Executive Director of the Lancaster County (Pa.) Workforce Investment Board, and this one on the Pacific Mountain Workforce Development Council in Washington state.

The approach isn’t difficult or overwhelming. It just requires an understanding of the problem that the employer faces, getting the right data to shed light on the issue, and working with them to find the workers that will help them build a better workforce.

Return on Investment

As the workforce board establishes these relationships with the business community, they will be in a position to address other public concerns, like return on investment. For the past 12 years, EMSI has been supplying many of the nation’s community colleges with our Economic Impact Study. To produce the study, EMSI collects lots of internal data from the college and combines it with external labor market information to create an overall statement of performance. The colleges have used the study to make powerful arguments to their regions and states about the impact that they have on the economy and workforce. This is just the sort of statement that is needed in the workforce investment system.

The Workforce Investment Act (WIA) has a stated purpose “to consolidate, coordinate, and improve employment, training, literacy and vocational rehabilitation programs in the United States.” Given this mission, how can boards understand their WIA programs’ effectiveness?

That’s the question that was brought to EMSI and NAWB in 2011. Boards needed a rigorous economic evaluation of their programs – an evaluation that was repeatable, unbiased, and able to withstand scrutiny from different audiences.

The program started with seven WIBs in a pilot effort, and the methodology was reviewed by economists to ensure reliability. After the first iteration, we did a second project with South Central Michigan, which was released in March of 2012.  Since then, we have done similar projects, including a statewide analysis for Oklahoma, and are currently doing a statewide analysis for California.

The study uses a workforce board’s internal data to provide a report that shows the benefits and cost of WIA programs as well as economic impacts generated by the boards themselves and their service providers.

And, here is the tie-in to using data. So far, the WIBs with the best results are the ones that really do their “homework” on their local economies and establish strong business service efforts. They are the ones that use data to understand the industries and occupations that are driving their region.


For the past 10 years, EMSI has been supplying WIBs with the data necessary for understand and communicating with employers about the local economy and workforce. Over the years we have seen many powerful stories of workforce boards positively impacting employers and jobseekers throughout their regions. It is something we take pride in and something we would like to help other regions reproduce. The goal is to help WIBs support the business community and to bring the key players together to help establish the right development mission for the community. In addition to labor market data, EMSI is passionate about training and supporting WIBs. We are fully committed to our partners’ success and take it very seriously. Having EMSI is like having another fun, relatable economist on staff.

If you would like to learn more about what we do and how we help, please contact us or visit

Rob Sentz is VP, Marketing for Economic Modeling Specialists International (EMSI).

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