ODDC- Workforce Investment Act: Employers are aware of, using and Satisfied with one-stop services but more data could help labor better address Employers’ needs- February 2005

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TITLE: Workforce Investment Act: Employers are aware of, using and Satisfied with one-stop services but more data could help labor better address Employers’ needs- February 2005 www.gao.gov/cgi-bin/getrpt?GAO-05-259.

Author: United States Government Accountability Office (GAO) (Katherine Cargill-Willis 5/12/05)

Purpose: This report examines:

The extent to which employers, including small businesses, are aware of and using the one-stop system;
The degree to which employers who use one-stop services report satisfaction and what factors cause employers not to use them; and
What the Department of Labor (Labor) has done to support employer awareness and use of the Workforce system and how Labor measures its success in meeting the needs of employers.

Methodology: To address these issues, a nationally representative sample of private sector employers, state and local workforce officials were surveyed. All fifty states and 568 local workforce investment areas were surveyed and responses were received from all the states and 463 local areas (81.5%). Four states, Florida, Michigan, Oklahoma, and Wyoming, had site visits. In each of these states, workforce officials and local employers were interviewed in two local areas- one urban and one rural. These states were selected based on their geographic dispersion and the diversity of their employment growth rates; Florida and Wyoming that had high employment growth rates, and Oklahoma and Michigan with relatively high employment loss rates.

A sample of 3,232 small, medium, and large private sector employers from a nationwide database of businesses were interviewed. All services provided by one-stop centers through employers were examined, including one-stop career centers, including applicant screening, skills assessment, and training;
54% responded after adjusting for cases that were ineligible or whose eligibility could not be determined.
Personnel at business establishments were surveyed rather than corporate headquarters because they are more likely to be responsible for local hiring and training practices, such as use of one-stops.
Labor officials were interviewed about their efforts to support employer awareness and use of the workforce system and related documentation were reviewed.
Representatives from employer associations, such as the U.S. Chamber of Commerce and others were interviewed.

Survey results that represent all private sector employers in the U.S. are heavily influenced by the results for small businesses because over 95 percent of all business establishments are small. However, medium and large business establishments employ a majority of the workforce.

Employers are private sector business establishments with at least two employees.
A business establishment is the physical location of a certain economic activity, such as a factory, store, or office.
Small businesses employ between two to forty-nine people;
Medium businesses employ fifty to four hundred and ninety-nine people;
Large businesses employ five hundred or more people.

Background: The economy of the United States is fueled by 8 million private sector businesses that employ 106 million of the nation’s 137 million workers. While most of these businesses employ fewer than 50 workers, the majority of workers are employed by larger businesses. Employers are seeking better ways to meet their workforce needs as they compete in the global economy.

The federal government currently invests in a workforce system with multiple programs to help workers find jobs, and to help employers find the workers they need. In 1998, the Workforce Investment Act (WIA) created a comprehensive workforce system, called the one-stop system, designed to help both job seekers and employers. WIA requires states and localities to bring together 17 federal programs and make their services available through about 1,900 one-stops nationwide. The total budget for these programs is about $15 billion in federal funding.

Labor has developed partnerships with businesses and industry to provide employers easier access to the resources of the one-stop system. To measure how the one-stop system is meeting the needs of employers, Labor requires states to collect information on employer satisfaction with the one-stop system, but not on employer use of the system. Labor’s employer satisfaction measure provides a high-level indicator of whether employers are satisfied with the one-stop services they receive; it does not, however, provide enough information on the services employers use to help Labor manage its resources. Because Labor collects little information on employers’ use of the one-stops, the extent to which these services help employers is unknown. WIA increased the focus on the employer as a customer of the publicly funded workforce system and requires that employers constitute a majority of members on state and local workforce investment boards. These boards develop policy and provide oversight for the one-stops. The one-stops provide employers with services such as applicant screening, skill assessment, and training. The publicly funded workforce system also provides employers and job seekers with other resources, such as a national, online job openings database—called America’s Job Bank—and labor market information such as current wage rates.

Large and Medium-Sized Employers Are More To Be Aware Of And Use Their Local One-Stops:

About one-half of all employers are aware of the local one-stops, awareness levels increase with employer size, with about half of small, two-thirds of medium, and three-quarters of large employers knowing about their local one-stops;
Most employers learn about one-stops through word of mouth in the private sector;
Large and medium employers are more likely than small employers to learn about one-stops from a one-stop official or government representative;
Employers generally use one-stop services to help fill job vacancies through posting job announcements and screening job applicants, with large employers being three to four times more likely than small employers to use these services;
Small employers’ lower rate of usage could be associated with their lower likelihood of hiring;
Few employers of any size are likely to access training services through one-stops;
56% of large employers are aware of the America’s Job Bank Web site;
17% of small employers are aware of the web site;
74% of large employers are aware of labor market information funded by Labor;
40% of small employers are aware of labor market information funded by Labor;
According to Labor, employers use the America’s Job Bank Web site to find prospective employees, and they use labor market information to learn about employment trends and wages.
Several employers said they used labor market information on current wage rates in order to comply with wage laws or to set compensation rates.

Most Employers Are Satisfied with One-Stop Services, and Few Have Concerns about Service Quality:

78% of employers who use one-stop services are satisfied, particularly with the timeliness of services and the extent to which services address their needs;
Most employers who use one-stop services would likely use them again and about three-quarters would recommend the service to another businessperson;
About one-third of employers who are aware of one-stop services but do not use them would consider using them and only 3% decline to use them because of concerns about the quality of services;
Many of these employers choose not to use one-stops because they rely on other resources to hire and train workers or do not have enough information about the services one-stops offer;
Most employers pointed to cost and time savings as the primary benefit of using one-stops;
83% of employers who use one-stops said hey are willing to consider using one-stops in the future;
About 21% chose not to use one-stops because they lacked information about their services and several employers who aware of one-stops, they did not know about the breadth of services they offered.
Nearly all employers thought that one-stops should try to increase general awareness of one-stops among employers.

Labor Has Taken Steps to Support Employer Awareness and Use of the One-Stop System but Lacks Data on Employer Usage: Labor has developed a number of initiatives to support employer awareness and use of the one-stop system but has limited information about the extent to which employers use the system.

Partnership for Jobs Initiative with 23 large, multi-state employers, provides better access to the resources of the approximately 1,900 one-stops nationwide. These 23 employers have hired approximately 15,000 people.
Through its ongoing High-Growth Training Initiative, Labor has also directed more than $92 million, as of June 2004, to public-private partnerships in which growing industries work with education and training providers to ensure that workers, especially students just entering the workforce, get the skills they need to compete in growing fields like biotechnology and high-tech manufacturing;
Labor provided a $1.6 million grant to a seven-state consortium to develop model outreach strategies for marketing one-stop services to employers.

Labor requires states to report on employers’ overall satisfaction with one-stop services, but not on their use of these services: Labor requires that states conduct quarterly telephone surveys of employers to obtain information on their overall satisfaction with the services provided by the one-stops. Each state negotiates with Labor to set its own goal for employer customer satisfaction. Because of the general nature of the employer satisfaction measure, it has limited usefulness to Labor for management of its one-stop system resources. Usage information, such as the number of employers using one-stop services, is not available to Labor because it does not require that states collect information on employers’ use of one-stop services.

Labor’s Employment and Training Administration (ETA) has proposed a new data collection and reporting system called the ETA Management Information and Longitudinal Evaluation (EMILE) to, among other things, obtain more detailed information about employers’ use of one-stop services. Labor’s proposed reporting system would require states to collect specific employer-related information, such as the characteristics of the employers and the services they use.

Many Local Areas Collect Information on Employer Use of One-Stop Services, but Most States Do Not Track This Type of Information: While at least half of the local areas track such measures as the number of employers that use one-stop services, the type of services that employers use, and the number of employers that hire one-stop job seekers, this information on employer usage is not communicated to most states or Labor. Only about one -third of all states require local areas to report on the number of employers that use their services and eleven states track the type of one-stop services that employers use. Because states are currently not required by Labor to collect this type of information, it is unavailable at the state and federal level to help them manage federal workforce resources.

Recommendation for Executive Actions: To ensure that Labor has a better understanding of the degree to which the publicly funded workforce system meets employers’ needs, the Secretary of Labor should require states to collect and report on employer use of the one-stop system in addition to continuing to collect general employer satisfaction information.

Agency Comments: Labor agreed with the GAO’s findings and recommendation that the Secretary of Labor require states to collect and report on employer use of the one-stop system to better understand the degree to which the system is meeting the needs of employers. Labor stated that one component of its proposed revised reporting system would collect information on employers’ use of one-stop services. However, the agency continues to reconcile comments on its proposed reporting system and to determine its feasibility.

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