Older Workers:An Essential Resource

for Massachusetts

Commonwealth of MassachusettsBlue Ribbon Commission on Older Workers

April, 2000

Members of the Blue Ribbon Commission

Mr. Warren PepicelliCo-ChairVice President and District ManagerU.N.I.T.E., AFL-CIO

Ms. Beverly Hynes-GraceVice President,Corporate Gerontology DevelopmentHartford Financial Services Group

Dr. James JenningsDirectorThe Trotter InstituteUniversity of Massachusetts Boston

Mr. Joseph PerkinsPresidentAARP

Dr. Paula RaymanExecutive DirectorRadcliffe Public Policy Institute

Mr. Steve R. SullivanPreviously, DirectorRapid Response ProgramMassachusetts AFL-CIO

Professor John T. DunlopChairLamont University Professor EmeritusHarvard University

Dr. Lynn BrowneSenior Vice President &Director of ResearchFederal Reserve Bank of Boston

Hon. William BulgerPresidentUniversity of Massachusetts

Ms. Juliet BrudneyColumnistThe Boston Globe

Dr. Joseph CroninPresidentEdvisorsPreviously, President, Bentley College

Monica HalasSenior AttorneyGreater Boston Legal Services

Mr. Robert HatemExecutive Assistant to the PresidentNorthern Essex Community CollegePreviously, ChairLower Merrimack Valley RegionalEmployment Board

Research Staff

Professor Peter B. Doeringer, Director Professor Andrew SumDepartment of Economics Center for Labor Market Studies

Boston University Northeastern University

Professor David TerklaDepartment of Economics

University of Massachusetts Boston

Acknowledgments

The Blue Ribbon Commission on Older Workers wishes to express its grat-itude to the research team of Peter B. Doeringer of Boston University(Research Director), Andrew Sum of Northeastern University, and DavidTerkla of the University of Massachusetts Boston. This group of talentedacademics guided the work of the Commission for over two years and madesubstantial contributions throughout this period to the Commission’sunderstanding of policies for older workers.

This final report of the Commission was prepared by Professors AndrewSum and David Terkla, along with Professor Doeringer. The assistance ofAlison Gottlieb and Jill Norton of the University of Massachusetts Boston,and Neeta Fogg, Neal Fogg, Sheila Palma, Steve Rubb, and Paul Suozzo ofNortheastern University is gratefully acknowledged. Special thanks are alsodue to Christine Karavites, Charles LaPier, Rickie Moriarity, JonathanRaymond, David Smith, and Suzanne Teegarden for their thoughtful com-ments on the various drafts of the report.

The research program was supported by a contract from the Division ofEmployment and Training to the Gerontology Institute, University ofMassachusetts Boston. The Gerontology Institute and the Center for LaborMarket Studies at Northeastern University provided technical support tothe program. Boston University; the Jacob Wertheim Fellowship for theBetterment of Industrial Relationships, Harvard University; NortheasternUniversity; and the University of Massachusetts Boston provided financialsupport for publication of this report.

John T. Dunlop, ChairWarren Pepicelli, Co-Chair

H ighlights for Policy Action

The Legislature should:

■ Work with the Governor to establish a Workforce Investment Boardresponsible for all publicly funded human resources programs.

■ Provide additional resources for long-term training of older workers bycommunity colleges and other post-secondary institutions to help reducemajor skill mismatches.

■ Enact a Workplace Training Fund for public-sector employees.

■ Establish a 21st Century Workforce Development Commission to reportannually on the Massachusetts economy and issues of workforce develop-ment.

The Governor should:

■ Establish a comprehensive planning system for all publicly funded work-force development programs in the Commonwealth.

■ Create a comprehensive network of local "One-Stop" Centers responsi-ble for all publicly funded workforce development programs in theCommonwealth.

■ Strengthen the capacity of unions and employers (particularly small firmswith fewer than 50 employees) to upgrade the skills of older workers.

■ Give priority to meeting the needs of low-income workers in all publiclyfunded workforce development programs in the Commonwealth.

■ Establish an independent system for evaluating all publicly funded work-force development programs in terms of long-term improvements in par-ticipants’ earnings and reductions in skilled-labor scarcities.

Table of Contents

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Older Workers: An Essential Resource . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Economic Growth and Emerging Labor Scarcities . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Options for Closing the Labor Supply Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Labor Market Mismatches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Beyond the Mismatch Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

The Adequacy of Employment and Training Resources . . . . . . . . . . . . . . . . . . . . . . . .32

A New Agenda for Workforce Development Policy . . . . . . . . . . . . . . . . . . . . . . . . . . .38Assessment and Placement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39Building a System of Lifelong Training and Education Ladders . . . . . . . . . . . . .41Employers, Union, and Workplace Training . . . . . . . . . . . . . . . . . . . . . . . . . . .43Supported Work Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45Strengthening State Leadership in Planning, Coordination, and Oversight . . . . .46Coordination and Delivery of Services at the Regional Level . . . . . . . . . . . . . . .47Improving Program Performance Through Accountability and Learning . . . . . .49Resources and Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

Ensuring a Level Playing Field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

Promoting Work Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54

Making Massachusetts the Workforce Development State . . . . . . . . . . . . . . . . . . . . . .55

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57

Appendix I, Research Reports and Briefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

Appendix II, Meetings and Hearings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60

Appendix III, Recommendations for the Workforce Training Fund . . . . . . . . . . . . . . .62

Figures

Figure 1 - Growth Rates of the State’s45- to 69-Year-Old ResidentPopulation, Selected Time Periods,1970-2010 . . . . . . . . . . . . . . . . .11

Figure 2 - Median Age of the CivilianLabor Force in Massachusetts, 1980-2010 . . . . . . . . . . . . . . . . . . . . . .12

Figure 3 - 45- to 69-Year-Olds as aPercent of the Massachusetts CivilianLabor Force, Selected Years, 1990-2010 . . . . . . . . . . . . . . . . .13

Figure 4 - Projected Growth in theMassachusetts Labor Force by Age,1996-2006 . . . . . . . . . . . . . . . . .13

Figure 5 - MassachusettsUnemployment Rates, 1989-1998(Annual Averages) . . . . . . . . . . . .14

Figure 6 - Trends in Massachusetts RealPer Capita Personal Income 1989-1997(in 1996 Dollars) . . . . . . . . . . . . .14

Figure 7 - Projected EmploymentGrowth in Massachusetts 1996-2005(in Thousands) . . . . . . . . . . . . . .15

Figure 8 - Trends in the Civilian LaborForce Participation Rates of 45- to 69-Year-Old Men in Massachusetts, 1970-1997 by Age Group . . . . . . . . . . .17

Figure 9 - Comparisons of the Actualand Hypothetical Number of Full-TimeEmployed 45- to 69-Year-Olds inMassachusetts, 1996-97 . . . . . . . .20

Figure 10 - Projected Labor ForceShortfall under Three AlternativeScenarios for Massachusetts, 1996-2006(Numbers in Thousands) . . . . . . .21

Figure 11 - Percent of OlderMassachusetts Residents (45-69) WithSome Type of Labor Market Problem,by Problem Type (1995-97 average) . . . . . . . . . . . .21

Figure 12- Distribution ofDisadvantaged Older Workers by Typeof Labor Market Problem, 1995-97Averages . . . . . . . . . . . . . . . . . . .22

Tables

TABLE 1 - Number of MassachusettsResidents Ages 16-69 and 45-69, 1970-2010 (in 1000's) . . . . . . . . . . . . . . . .12

TABLE 2 - Projected Growth in theMassachusetts Civilian Labor Force underThree Alternative Scenarios, 1995-2005 . . . . . . . . . . . . . . . . . . . .16

TABLE 3 - Projected Growth in theMassachusetts Older Worker Labor Forceand the Total Labor Force (16+) underThree Alternative Scenarios, 1995-2005 . . . . . . . . . . . . . . . . . . . .16

TABLE 4 - Trends in the Civilian LaborForce Participation Rates of 45- to 69-Year-Old Men in Massachusetts, 1970 to 1997,by Age Group (Numbers in Percentages) . . . . . . . . . . . . . . . . . . .17

TABLE 5 - Comparisons of the 1996Civilian Labor Force Participation Rates ofOlder Men 45-69 in Massachusetts withThose of the Averages for the Five HighestStates, by Age Group . . . . . . . . . . . .18

TABLE 6 - Comparisons of the ActualNumber of Older Males in the CivilianLabor Force in Massachusetts in 1996-97with the Number that Would Have Been inthe Labor Force if 1970 Labor ForceParticipation Rates Had Been Maintained,by Age Group . . . . . . . . . . . . . . . . . .18

TABLE 7 - Comparisons of Percent ofOlder Employed (1) Males Working Part-Time in Massachusetts, 1970 and 1996-97,by Age Group . . . . . . . . . . . . . . . . . .19

TABLE 8 - Comparisons of 1970 and1996-97 Full-Time Employment toPopulation Ratios for 45- to 69-Year-OldMales in Massachusetts, by Age Group . . . . . . . . . . . . . . . . . .19

TABLE 9 - Comparisons of the ActualNumber of Full-Time Employed 45- to 69-Year-Old Males in Massachusetts During1996-97 with the Number that WouldHave Existed if 1970 Full-Time E/P RatiosHad Prevailed, by Age Group . . . . . .20

TABLE 10 - Unemployment Rates of 45-to 69-Year-Old Persons in Massachusetts byEducational Attainment, 1996 (AnnualAverages in Percentages) . . . . . . . . . .27

TABLE 11 - The Distribution of the OlderWorker Universe of Need by Type of LaborMarket Problem, 1995-97 Averages . .28

TABLE 12 - Number of Older Persons(45+) Participating in Selected Employmentand Training Programs in MassachusettsDuring Program Year 1996 . . . . . . . .34

TABLE 13 - Selected Employment andWage Outcomes for Older Persons (45-69)Terminating from JTPA Title IIA, Title IIIand Section 204(d) Programs During PY1996 . . . . . . . . . . . . . . . . . . . . . . . .35

Preface

The Massachusetts Jobs Council establishedthe Blue Ribbon Commission on Ol d e rWo rkers in 1997 to analyze the labor mar-ket for older workers in the Commonwe a l t hand to recommend policies to improve theeconomic status of the older labor forc e .Commission members we re chosen to re p-resent a cross-section of expertise on olderw o rker issues and the Commission isc h a i red by John T. Du n l o p, former U. S.Se c re t a ry of Labor and Ha rva rd Pro f e s s o r.

The Commission held over two years ofhearings, town meetings, and focus groupsto solicit the views of interested parties. Italso commissioned an extensive set ofresearch studies on the role of older work-ers in the Commonwealth.

The initial focus of the Commission wason programs to help economically disad-vantaged workers over 55, the group sin-gled out for special consideration underthe federal gove r n m e n t’s Job Tr a i n i n gPartnership Act. However, it soon becameevident that the employment and trainingissues involving older workers can betraced to their earlier employment difficul-ties. This led the Commission to extend itsdefinition of "older" workers to includeworkers ages 45-54 so that the employ-ment problems of aging could be add-ressed before they become chronic.

While analyzing the future employ m e n tp rospects for older workers, the Commission

also found that the Massachusetts labor mar-ket is likely to face seve re labor market scarc i-ties and skill mismatches over the nextdecade. The current prosperity is beginningto press against the limits of a labor force thathas shown almost ze ro growth thro u g h o u tthe 1990s and Commission pro j e c t i o n ss h ow a potentially large labor supply deficitt h rough the middle of the next decade.

Unless significant steps are taken toincrease the supply of skilled and educatedl a b o r, the continued growth of theMassachusetts economy will be thre a t-ened. In the quest for new sources of labor,the Commission’s studies show that work-ers 45 and older represent the largest laborreserve in the Commonwealth potentiallyavailable to fill this deficit.

Two major changes in government spon-sored training policies occurred during1999 that influenced the Commission’sdeliberations. The Commonwealth estab-lished a new Workforce Training Fund toassist employers in upgrading the skills oftheir existing workforces and, on the fed-eral level, the Job Training Partnership Actwas replaced by the Workforce InvestmentAct (WIA). WIA consolidates a numberof previous programs (including the elimi-nation of special funds dedicated to assist-ing older workers) and provides forimprovements in program planning, deliv-ery, and evaluation systems at the state andlocal levels.

The Commission’s final recommendationsemphasize the need to address the twin

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challenges of developing the new sourcesof labor supply needed for continued eco-nomic growth and of ensuring that olderworkers will share fully in the resultingprosperity. These same recommendations,however, apply with equal force to theCommonwealth’s entire workforce devel-opment system. If this blueprint for link-ing education and training programs tothe human resources needs of the econo-my is adopted, Massachusetts couldbecome the nation’s leading "workforcedevelopment" state.

Warren PepicelliMember, Massachusetts Jobs Council andCo-Chair,Blue Ribbon Commission on OlderWorkers

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Older Workers: AnEssential Resource

President Clinton has recently high-lighted the "phenomenal demo-graphic change" that will occur as

the baby boom generation enters its fifties(Economic Report of the President, 1999).Men and women age 65 can expect to liveanother 15.7 and 19.2 years, respectively,an increase of about 25% since 1950, forexample. This aging of the baby boomgeneration comes at a time when longerlife spans permit older persons to be pro-ductive long after the customary age ofretirement. Even if the retirement agewere raised to 70, the average Americanworker would spend three more years in

retirement than in 1950. Nevertheless,most Americans continue to re t i rebetween ages 62 and 65, or even earlier,and many others are switching from full-time to part-time jobs before retirement.

Policy debates about the implications oflonger lives and the aging of the workforcetypically focus on the adequacy of retire-ment incomes and the solvency ofMedicare and Social Security. While theseare valid concerns, equally important arelabor-market factors affecting the worki n c e n t i ves of older workers and theprospects for productively extending theirworking lives.

For example, extending the working lives ofolder persons to take advantage of the 25%

i n c rease in life spans since 1950would help solve the financialp roblems of the Social Se c u r i t ysystem. Si m i l a r l y, tapping thepotential for longer working live scould provide important laborre s e rves as the economy appro a -ches full employ m e n t .

The Massachusetts economy pro-

vides a dramatic illustration of the

i m p o rtance of these issues of work

and re t i rement. The number of

older persons (defined by the

Commission as those aged 45-69)

in the state’s population began ris-

ing in the 1990s as the first wave

of the baby boom generation

reached their mid-forties, and this

t rend will accelerate over the next

decade (see Table 1; Fi g u re 1; and

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also Re s e a rch Re p o rt #4, 1997).

Be t ween 1995 and 2010, the older pop-

ulation (45-69) will rise by 534,000

and its share of the state’s working age

population (16-69) will reach an histor-

ical high of 43%, up from 32% in 1990

( Sum & Su o z zo, 1999).

These population trends are mirroredin the aging of the Commonwealth’slabor supply. The average age of theworkforce is projected to jump from36 in 1990 to over 40 by 2005 (seeFigure 2), while the fraction of thew o rk f o rce accounted for by olderworkers (those aged 45-69) will growfrom 28% in 1990 to 40% by 2010(See Figure 3; also Research Report#4, 1997)1. Despite a trendt ow a rds earlier re t i re m e n tamong male workers, pro-jections pre p a red for theCommission show that allof the net increase in thelabor force to 2006 wouldcome from older work e r s(see Figure 4). The aging ofthe workforce is particularlysevere in Massachusetts, butsimilar trends are occurringthroughout the country.

The aging of the labor forceaffects the Ma s s a c h u s e t t seconomy in complex ways.Older workers who losetheir jobs often face obsta-cles to re-employment andthus tend to have longer

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TABLE 1

Number of Massachusetts Residents Ages 16-69 and 45-69, 1970-2010

(in 1000’s)(A) (B) (C)

45-69 as %Year 16-69 45-69 of 16-691970 3559 1399 39.31980 3953 1391 35.21990 4229 1374 32.51995 4164 1440 34.62000 4233 1567 37.02005 4390 1771 40.32010 4551 1974 43.4

Sources:

(i) 1970, 1980, and 1990 Census of Population and Housing.

(ii) U.S. Census Bureau, Projections of the Population by State for the 1995-2025 Period.

1The size of the resident labor force under age 25 will rise through 2005, but this will be offset by steep declinesin the number of 25- 39-year-olds.

spells of unemployment thanyounger workers. They also tendto experience substantial earn-ings losses when they become re-employed, or they may retireprematurely.

At the same time, however, thetrend towards earlier retirementamong males in recent years hashelped to reduce unemploymentand raise earnings for workers inMassachusetts because it hasslowed the growth of the labors u p p l y. The Commonwe a l t h’slabor force grew by only 1%between 1990 and 1997 – a rateof growth that places Ma s s a -chusetts 47th out of 50 states.With flat growth in labor supplyand a strong economic expan-sion, unemployment rates havefallen rapidly from 8%-9% inthe early 1990s to close to 3% inlate 1998 (see Figure 5), the low-est level in over a decade. Realearnings have also begun to growagain, and per capita income hasrisen in inflation-adjusted(1996) dollars by 15% since1991, following a decline ofnearly 6% during the 1989-91recession (see Figure 6).

Many older persons who contin-ue to work have shared in theseeconomic gains, particularly wo-men and those with some post-s e c o n d a ry schooling. Si n c e1979, the real average annualearnings of males aged 45-64

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rose from $43,800 to just under$54,000 (1997), a gain of 23%(Research Report #13, 1998)and well-educated older men(those with 17 or more years ofschooling) improved their realearnings by 35% between 1979and the mid-1990s. The gainsin real earnings for olderwomen (45-64) are even moreimpressive, with average earn-ings rising from $18,720 to$27,057 during this period, again of almost 45%, as boththeir wages and the number ofhours worked increased.

Despite these gains, however,the average annual earnings ofolder women who work still lagconsiderably behind those ofmen. The median earnings ofolder women who work fulltime are only 60% of those forfull-time older male workers.There is also a sizeable group ofolder male and female workerswho are left behind by growth.Those left behind represent ad i verse set of employ m e n tproblems, ranging from inade-quate education and obsoleteskills to family care responsibil-ities and age discrimination.However, they experience simi-lar consequences of unemploy-ment, underemployment, andpoverty.

For example, older males withl ow levels of education haveseen substantial declines in real

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earnings since 1979 and their rate of labor-f o rce participation has also fallen( Re s e a rch Re p o rt # 5, 1997). Ol d e rwomen without high school diplomas,unlike better-educated older women, haveexperienced a set of economic problemssimilar to those of older men. Growingnumbers of older persons with little edu-cation or other disadvantages are receivingSocial Security Disability and Su p p l e -mental Security Income payments andother forms of income assistance.

Older workers who are left behind repre-

sent the highest priority for employment

and training assistance. While their num-

bers are significant, their problems are

manageable within a Massachusetts econo-

my that is currently generating a gross state

p roduct of over $220 billion (1997).

Should employment growth slow, however,

these trends will worsen as the Massachu-

setts population continues to age.

Economic Growth andEmerging LaborScarcities

Fortunately, Massachusetts has expe-rienced high job growth in recentyears. Its labor markets are among

the tightest in the country and the growthpotential of the Massachusetts economyremains high. The most recent projectionsby the Massachusetts Division ofEmployment and Training (DET) showthat the economy has the potential for a

further 12% growth in jobs between1996 and 2006 (Massachusetts DET,1999). Because Massachusetts is so closeto full employment, however, achievingthis growth depends on the labor supplygrowing at a corresponding rate.

Un f o rt u n a t e l y, the Commonwe a l t h’slabor supply is unlikely to keep pacewith potential economic growth. TheC o m m i s s i o n’s most optimistic laborsupply projection is for a 6% increase insupply over the decade, and alternativep rojections show that supply couldgrow by as little as 4%. This slowgrowth in the workforce means that thelabor supply will grow at only one thirdto one half the rate needed to realize theCommonwealth’s full growth potential(see Figure 7; Table 2; and also ResearchBrief #15, 1999).

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Even these relatively low rates ofg rowth may not be possible,because they depend critically onutilizing older workers moreeffectively than has been the casein recent years. For example, theCommission’s projection of a 6%growth in labor supply assumes arising rate of labor-force attach-ment among most groups ofolder workers, especially women(see Table 3; also Re s e a rc hReport #4, 1997).2 While thelabor force participation rates ofolder females in Massachusettsh a ve been steadily incre a s i n g ,those of older males have fallen.L a b o r - f o rce participation ratesfor older male workers inMassachusetts, once among thehighest in the country, havedropped by almost 11 percent-age points since 1970 (see Table4; Figure 8) and Massachusettsnow ranks only about 25th inthe nation in terms of the partic-ipation rates of older men (seeTable 5). This represents a loss tothe Massachusetts economy ofabout 72,000 older male workers(see Table 6).

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TABLE 2

Projected Growth in the Massachusetts Civilian Labor Force Under Three Alternative Scenarios, 1995-2005

(in 1000’s)

(A) (B) (C) (D)1995 2005

Civilian Civilian Projected PercentScenario Labor Force Labor Force Change ChangeA 3,175 3,311 136 4.3%B 3,175 3,363 188 5.9%C 3,175 3,349 174 5.5%

Note:

Scenario A assumes the 1995 labor force participation rates of residents by age groupwill remain unchanged through 2005.

Scenario B adjusts the 1995 participation rates of residents by age group for project-ed national changes in the participation rates of persons from 1995 to 2005.

Scenario C adjusts the 1995 participation rates of residents by detailed age group bythe projected national changes in the participation rates between 1996 and 2005.

TABLE 3Projected Growth in the Massachusetts Older Worker

Labor Force and the Total Labor Force (16+) Under Three Alternative Scenarios, 1995-2005

(in 1000’s)

(A) (B) (C)Projected Projected Growth ofGrowth of Growth of Older Workers As a % of

Scenario Older Work Force Labor Force Total Labor Force Growth

A 263,539 135,738 194%

B 309,190 187,378 165%

C 299,283 173,741 172%

Note:

Scenario A assumes the 1995 labor force participation rates of residents by age groupwill remain unchanged through 2005.

Scenario B adjusts the 1995 participation rates of residents by age group for projectednational changes in the participation rates of persons from 1995 to 2005.

Scenario C adjusts the 1995 participation rates of residents by detailed age group bythe projected national changes in the participation rates between 1996 and 2005.

2 Under Scenario B (see Table 2), modest declines in labor-force participation rates (typically less than one per-centage point) are projected for males ages 45-64.

These substantial declines inlabor force participation rates,h owe ve r, actually understatethe shrinkage in the labor sup-ply of older males because theydo not reflect the decline inhours worked and the doublingof the fraction of older maleswho are employed in part-timee m p l oyment since 1970 (seeTables 7 and 8). If the share ofthe older population in full-time jobs in 1970 had not fall-en, the Commonwealth wouldhave had more than 120,000additional older males holdingfull-time jobs in 1996-97,almost 30% more males thanwe re actually employed full-time in that period (see Table 9and Figure 9).

The interpretation of thesechanges in labor supply is some-what controversial. Some natio-nal studies emphasize the easingof work disincentives of manda-t o ry re t i rement and So c i a lSecurity and private pensionplans -- as well as the grow i n gflexibility of the labor mark e tthat permits older workers toshift to part-time employment in"bridge jobs" prior to re t i re m e n t-- as having helped to re verse thedecline in older-worker labor-f o rce participation rates (Qu i n n ,f o rthcoming; Economic Re p o rtof the President, 1999). It isargued that with the end ofm a n d a t o ry re t i rement and thereduction of the work disincen-

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TABLE 4Trends in the Civilian Labor Force ParticipationRates of 45- 69-Year-Old Men in Massachusetts,

1970 to 1997, by Age G roup(Numbers in Percent)

(A) (B) (C)Absolute

Age Group 1970 1996-1997 Change

45-49 94.9 90.9 -4.0

50-54 93.3 87.6 -5.7

55-59 90.0 80.7 -9.3

60-64 71.1 55.8 -15.3

65-69 46.7 28.6 -18.1

45-69, All 84.5 73.6 -10.9

Sources:

(i) 1970 Census of Population and Housing, Massachusetts.

(ii) 1996-97 monthly CPS household surveys for Massachusetts,tabulation by Center for Labor Market Studies.

t i ves in Social Security and pen-sion plans, the U.S. labor mar-ket is poised to absorb a re a d yand able pool of older work e r s ,p roviding employers create suffi-cient numbers of part-time ando t h e rwise flexible bridge jobs.

Other studies, however, pointto declining real wages amongdisplaced and less-educatedolder workers and question theeconomic value of bridge jobsin meeting economic needs ofolder workers (Do e r i n g e r,1990, Chs. 4 & 5 and Doeringer et al.,1991, Ch. 4). Bridge jobs typicallyi n vo l ve a change of occupation orindustry and often a switch to self-employment or a job in a small firm(Doeringer, 1990, Ch. 3). One study ofolder workers (55-64) in the mid-1980sfound that one in four involuntary jobchangers experienced a 40% loss inweekly wages upon re-employment and45% experienced a loss of 25% or more(Doeringer et al., 1991, Chapter 4).

While flexible employment, even at lowwages, can be a boon to older workerswith comfortable retirement prospectswho can afford phased retirement, it canalso represent employment of last resortfor those older workers with limitedlabor market options. The extent towhich the declines in labor supply inMassachusetts re p resent pre f e rences formore leisure and more flexible hours ofwork or are a response to deterioratinge m p l oyment opportunities cannot bedetermined from the data.

In either case, however, the contraction inthe labor supply of older workers throughthe mid-1990s has contributed to theCommonwealth’s current labor shortages.Should rates of retirement and hours ofwork among older males start to fall again,

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TABLE 5

Comparisons of the 1996 Civilian Labor Force ParticipationRates of Older Men 45-69 in Massachusetts with Those of

the Averages for the Five Highest States, by Age G roup

(A) (B) (C) (D)

DifferenceBetween

Massachusetts Average Five MassachusettsMassachusetts Rank Among Highest States and Five Highest

Age Group (in%) 50 States (in%) States

45-54 89.5 26th 94.9 -5.4

55-64 68.2 25th 79.4 -11.2

65-69 28.2 25th 41.1 -12.9

Sources:

(i) 1970 Census of Population and Housing, Massachusetts.

(ii) 1996-97 monthly CPS household surveys, Massachusetts, tabulationby Center for Labor Market Studies.

TABLE 6

Comparisons of the Actual Number of Older Malesin the Civilian Labor Force (CLF) in Massachusetts

in 1996-97 with the Number that Would Have Beenin the Labor Force if 1970 Labor Force Participation Rates

Had Been Maintained, by Age G roup(A) (B) (C)

Addition toActual Hypothetical Labor Force

Age Group CLF CLF (B-A)

45-49 195,685 204,484 8,799

50-54 151,280 161,124 9,844

55-59 93,574 104,358 10,784

60-64 61,435 85,432 23,997

65-69 31,690 51,747 20,057

45-69, Total 533,664 607,145 73,481

or even stabilize at their curre n tl e vel, the labor-supply deficit inMassachusetts will be even largerthan the Commission is currentlyp redicting (Re s e a rch Brief #10,1998).

Such a substantial shortfall in laborsupply could choke off growth eitherby creating scarcities of critical skillsor by raising the costs of doing busi-ness in Massachusetts as employerscompete for scarce labor. The likelyresult is that at least some of the jobg rowth that could occur inMassachusetts will be siphoned offto other regions (such as theSouthern and Rocky Mo u n t a i nstates) or to countries where labor ismore abundant and often less costly.The long-term consequences of sucha decline in the competitive positionof the Commonwealth are likely tobe felt across a broad spectrum of theMassachusetts economy.

1 9

Note: 1Findings pertain to those employed persons at work during the referenceweek of the survey.

Sources:(i) 1970 Census of Population and Housing, Massachusetts.(ii) 1996-97 monthly CPS household surveys, Massachusetts, tabulationby Center for Labor Market Studies.

TABLE 7

Comparisons of Percent of Older Emplo yed(1) MalesWorking Part-Time in Massachusetts,

1970 and 1996-97, by Age G roup(A) (B) (C)

PercentageChange

Age Group 1970 1996-97 1970 to 1996-97

45-49 5.2 11.3 +6.1

50-54 5.6 12.3 +6.7

55-59 6.2 15.2 +9.0

60-64 9.3 23.4 +14.1

65-69 29.5 47.2 +17.7

45-69, Total 7.9 16.5 +8.6

Note: 1Full-time employed include only those at work during the reference

week of the survey.

Sources:

(i) 1970 Census of Population and Housing, Massachusetts.

(ii) 1996-97 monthly CPS household surveys, Massachusetts, tabulation by Center for Labor Market Studies.

TABLE 8

Comparisons of 1970 and 1996 Full-Time Employment (1)

to Population Ratios for 45- 69-Year-Old Males in Massachusetts, by Age G roup

(A) (B) (C)Absolute Change

Age Group 1970 1996-97 1970 to 1996-97

45-49 85.8 75.0 -10.8

50-54 83.6 71.0 -12.6

55-59 79.5 57.9 -21.6

60-64 67.0 37.7 -29.3

65-69 29.2 12.7 -16.5

45-69, Total 73.2 56.1 -17.1

Options forClosing the LaborSupply Gap

If the Commonwealth in-tends to solve the problemsof growing skill scarcities,

it has few alternatives to utiliz-ing its aging workforce moreeffectively. Its pool of youngerworkers, especially those withcollege degrees, is nearly fullye m p l oyed. Attract-ing moreyoung workers will re q u i res t rong compensation incen-t i ves to offset the net out-migration that Massachusettshas been experiencing duringthe 1990s (Sum et al., 1998).For example, Ma s s a c h u s e t t salready pays somewhat higherwages for college graduatesthan its competitor states, butthe rising cost of housing hassubstantially diminished thiswage advantage. Si m i l a r l y,Massachusetts already ranksamong the top 12 states interms of participation offemales in the labor forc e .While some employers may bewilling to pay even higherwages to secure additional laborsupplies, and more work e r smay choose to swap longercommuting times for lowe rhousing costs in neighboringstates, expanding the supply ofyoung workers (ages 25-39) or

2 0

TABLE 9

Comparisons of Actual Number of Full-Time Emplo yed45- 69-Year-Old Males in Massachusetts During 1996-97 withthe Number that Would Have Existed if 1970 Full-Time E/P

Ratios Had P revailed, by Age G roup

(A) (B) (C)

Actual HypotheticalFull-Time Full-Time Hypothetical

Age Group Employed Employed Less Actual

45-49 161,528 184,876 +23,348

50-54 122,575 144,372 +21,797

55-59 67,139 92,182 +25,043

60-64 41,530 73,766 +32,236

65-69 14,092 32,355 +18,263

45-69, Total 406,864 527,551 +120,687

female workers is likely to bequite difficult and would raisethe costs of doing business inMassachusetts.

A second possibility is forMassachusetts to increase itsreliance on foreign immigrants.Massachusetts is fifth highest inthe nation in terms of the contri-bution of immigrants to labor-force growth (Center for LaborMa rket Studies, 1999), andalmost all of the net growth inlabor supply in the Common-wealth over the last decade hascome from outside the country(Sum et. al., 1998). While thestate’s employers have been suc-cessful thus far in lobbying forlarger quotas on technical andp rofessional personnel fro mabroad, these higher quotas havebeen quickly filled and furtheri n c reases cannot be countedupon to close the labor-supplygap facing the Commonwealth.

Absent a greater inflow of foreignimmigrants or a dramatic turn-around in the outflow of youngerw o rkers, the Commonwe a l t hwill have to develop more fullythe workforce that is already resi-dent in Massachusetts. The onlyl a b o r - f o rce group of sufficientsize to make this strategy work isthe growing pool of workers ages45 and over.

At least 217,000 more work e r swill be re q u i red to meet the

2 1

C o m m o n we a l t h’s full-employment grow t htarget by 2006, and as many as 268,000could be re q u i red if labor- force part i c i p a-tion rates do not increase over their 1995l e vels (Fi g u re 10).3 Closing this labor-sup-ply gap will re q u i re a substantial increase ofsix to seven percentage points in the pro-jected labor force participation rates ofeach major age subgroup of the older pop-ulation (ages 45-69). A much higher frac-tion of older persons in the Common-wealth will have to remain at work than hasbeen the case in recent years, better jobswill have to be found for those who areu n e m p l oyed and undere m p l oyed, andsome of those currently outside the laborf o rce will need to return to work .

A starting point for filling the supply gapare older persons who are currently unem-ployed or underutilized. This labor pool,by itself, is large enough to meet a sub-stantial fraction of the Commonwealth’semerging labor-supply needs. For exam-ple, the Commission has identified fourspecific reserves of older workers, totalingabout 190,000 persons, or about 6% ofthe workforce (see Figure 11). This groupincludes approximately 47,000 olderworkers who are unemployed and 33,000"hidden unemployed" who want jobs, buthave become discouraged from looking forw o rk (see Fi g u re 12). The ro u g h l y118,000 remaining are "underemployed,"consisting of 34,000 part-time older work-ers who want full-time work and over84,000 older workers who are in full-time,but marginal, employment that pays rela-tively low wages (less than the poverty linewage of $300 per week).

Securing jobs for all unemployed and dis-couraged older workers would effective l yadd almost 80,000 workers to the state’se m p l oyment. If all four labor re s e rve scould be utilized, the Commonwe a l t hwould make substantial pro g ress tow a rd sclosing the labor supply gap projected for2006. Fu rther substantial supply gainscould be secured by increasing the incen-t i ves for older workers to remain in, andreturn to, the labor market by substantiallyraising their skills and earnings’ potential.Accomplishing these goals, howe ve r, willre q u i re a major investment in skills neededto employ the unemployed and inactivel a b o r - f o rce re s e rves and to upgrade moregenerally the job opportunities available toolder work e r s .

2 2

3The 217,000 number reflects the difference between the projected growth in state employment (12%) and themost optimistic projected growth (5.9%) in the labor force (Table 2), which leaves a 6.1% gap (in the approxi-mate 3.2 million labor force).

Labor MarketMismatches

Tapping the potential of older work-

ers to close the Common-we a l t h’s

labor supply gap is not only a mat-

ter of increasing the number of older work e r s

in the labor force. It should be emphasize d

that all of the Commission’s labor-supply

p rojections assume that workers displaced

f rom declining industries will easily shift to

g rowing sectors. Since a dispro p o rt i o n a t e

s h a re of this sectoral adjustment will invo l ve

older workers (who are ove r - re p resented in

declining industries), deficiencies in the edu-

cation and skills needed for employment in

h i g h - g rowth sectors may be a barrier to their

re - e m p l oyment. Without substantial inve s t-

ments in upgrading their skills, older work e r s

may be underu t i l i zed or even discouraged

f rom remaining in the labor force and these

l a b o r - m a rket mismatches will hinder grow t h .

Shortfalls in EducationOne set of mismatches involves education.Employment projections for 2006 preparedby the Division of Em p l oyment andTraining show that job growth will be con-centrated among high-end industries thatrequire the highest skilled labor and, tosome extent, among those industries at thelower end of the labor market (Massa-chusetts DET, 1999). High-end growthindustries include computer software andrelated services, biotechnology, selectedfinancial services, medical offices, and pri-

vate education services. These sectors willcontinue to have a high proportion of pro-fessional, managerial, and technical jobsthat typically require at least a college edu-cation. While low-end growth industries,such as eating and drinking establishments,personal services, retailing, and homehealth care, can more easily accommodateworkers with less education, recent occupa-tional projections suggest that almost halfof all new jobs in the Commonwealth willre q u i re a bachelor’s degree or higher(Massachusetts DET, 1999).

Young adults are the traditional source ofn ew hires for growth industries inMassachusetts. While there will be modestg rowth by 2006 in the number of yo u n gadults 20-24 years old, this increase will bem o re than offset by steep declines in thenumber of more experienced young adults25-39 years old who are members of the" b a by bust" generation. The latter gro u p,which has been the pre f e r red source of newh i res in industries requiring both high leve l sof education and some work experience, willshrink by more than 200,000 between 1995and the year 2005 (Re s e a rch Re p o rt #4,1997). Even if entry - l e vel jobs only grow atthe average rate for the economy as a whole,t h e re will be a major shortfall of traditionale n t ry - l e vel workers, so that Ma s s a c h u s e t t s’e m p l oyers will have to turn to older work e r sor other sources of labor such as immigrantsor young high school dro p o u t s .

Today’s cohort of older workers ages 55 to

64 in Massachusetts is better educated than

2 3

its predecessors, and will be replaced by an

even more educated cohort as today’s 45-to

5 4 - year-olds age over the next decade.

However, fewer of these older workers are

as well educated as the young adults who

have been available to growth companies in

the 1990s. For example, only 30% of

workers 55 to 65 have at least a bachelor’s

degree, far below the 40% for workers 25

to 34 (Research Report #2, 1997). Among

underutilized older workers, one quarter of

the unemployed and almost one third of

the underemployed, lack a high school

diploma or its equivalent.

Skill MismatchesOccupational employment projections bythe Division of Employment and Trainingsuggest that professional and technicaloccupations will experience the highestgrowth rates in Massachusetts (Massachu-setts DET, 1999). Several sectors withhigh proportions of jobs in these occupa-tions, such as systems engineer, softwaredeveloper, biotech specialist, and alliedhealth and various technical specialists, arec u r rently facing labor-supply short a g e s .Other professional occupations, such asteaching, will face major labor needs forreplacing retirees, as well as meeting thegrowth in demand. There are no obviousnew sources of supply sufficient to meet allof the labor needs of these industries sothat substantial education and training ofthe current workforce will be required. Inparticular, many of the older workers whowill be available to fill these jobs have skillsand experience acquired in manufacturingoccupations and other industries that are

expected to be shedding labor. Such out-of-date skills are already a significant barri-er to the employment of older workers(Wagner & Bonham, 1998) and skill mis-matches can only become more severe.

Implications for EmployersLabor scarcities and skill mismatches ofthe magnitude projected for Massachusettswill impose major adjustment costs onemployers in terms of higher wages need-ed to recruit scarce workers and additionaltraining expenses. Employers are awarethat labor markets have been gettingtighter in Massachusetts, but few appreci-ate how much more difficult these adjust-ments are likely to be in the future.

Because there will not be enough of therelatively well-educated workers in theirtwenties and thirties that many employershave relied upon for decades to fill entry-level job vacancies, employers will have tolearn how to hire and train older workersfor entry jobs. This greater reliance onolder workers is coming at a time whene m p l oyers are investing less in olderemployees, compared to those who areyounger, and cutbacks are being made infederal training funds for older workers.

The extent of this impending shift towardsthe hiring of older workers can be illus-trated by three projections prepared forthe Commission. One scenario estimatesthe number of "failed" labor-mark e tmatches that are likely to occur if employ-ers in Massachusetts do not increase theircurrent share of older workers as the laborforce continues to age through the year

2 4

2005 (Research Brief #8, 1998). Underthese circumstances, nearly 200,000 olderworkers will fail to make job matches inthe year 2005 – a number equivalent toabout 15% of the workforce 45 and older.

A second scenario assumes that employerswill meet their labor needs by expandingtheir employment of older workers. If eachindustry bears an equal share of employ-ment adjustments by increasing its olderworkforce by the same percentage, sevensectors in the economy will end up withover 60% of the new hires of older work-ers (Research Brief # 8, 1998). Health ser-vices will experience the largest increase inthe number of older workers employed(47,000) followed by gove r n m e n t(37,500), business services (36,000), andengineering and management serv i c e s(21,300). Other industries facing largeincreases are finance and insurance, realestate, wholesale trade, and private educa-tion. Workers 45 and older will constituteclose to half or more of all employees inapparel, rubber and plastics, industrial andelectrical equipment, public utilities, localtransportation, and government, whereastoday they account for less than 40% ofmost of these industries’ employees. Toeffect these changes would also requireolder workers to make job changes acrossindustries far more frequently than is cur-rently the case.

The most likely scenario lies between these

two cases, but the burden of adjustment for

e m p l oyers will be even more lopsided. At

one extreme will be large employers in re l a-

t i vely high-wage growth industries who will

be able to compete successfully for the

shrinking pool of well-educated yo u n g

adults. These employers will only have to

make re l a t i vely minor adjustments in their

re c ruitment and hiring policies. At the other

e x t reme will be small employers and those

in low-wage industries, such as nursing

homes, eating and drinking establishments,

home health care services, and parts of busi-

ness services. Because they are less able to

compete for recent graduates, employers in

these sectors will have to shoulder the gre a t-

est share of the burden of adjustment to

overall labor-market mismatches.

Adjustments at the WorkplaceUnder any scenario that allows theC o m m o n wealth to achieve its grow t hpotential, the majority of employers willhave to substitute at least some olderworkers for their traditional entry workers.Hiring and selection practices will have tobe adapted to a workforce that has moreexperience, but less up-to-date education.Training and promotion practices willneed to be attuned to differences in howrecent school graduates and experiencedworkers learn new job skills. Wage andfringe benefit stru c t u res will need toaccommodate differences in the compen-sation preferences of younger and olderworkers, and more flexible working hourswill be needed for older workers who havedifferent family or caregiver responsibili-ties than younger workers.

These changes may not come easily. A fre-quent theme encountered in focus groupsof older workers convened by the

2 5

4The purposes and nature of these focus groups is discussed in more detail later in the report(Research Report #4, 1999).

Commission was that employers are reluc-tant to hire older workers, in part becausethey feel that older workers are not inter-ested in training and are often "afraid" ofcomputers.4 Yet, these same older workersclearly recognized the importance of train-ing in computer and other up-to-dateskills, and had a strong commitment togetting training.

National surveys of employers are re m a rk-ably consistent with the findings from thefocus groups. Managers often re g a rd olderw o rkers as excellent assets to the firm --m o re hard w o rking, reliable, and motiva t e dthan their younger counterparts (Sterns &Mc Daniel, 1994) – and they give olderw o rkers ve ry high marks for their use ofgood judgement, quality control, atten-dance, and low turnover (AARP, 1995).Howe ve r, they are also concerned that olderw o rkers are less willing to adapt to changingw o rk f o rce practices and technologies.

One study noted that older workers areviewed as somewhat fearful of new tech-nologies and somewhat difficult to attractto the growing number of positionsinvolving computer use (Belous, 1990),even though the use of computers byworkers over 50 has doubled since the mid1980s (Friedberg, 1999). Other studieshave found that many employers believeolder workers have difficulty learning newskills and are poor candidates for job train-ing (Costello, 1997). A generally opti-mistic study (AARP, 1995) also found thatthe majority of managers believe that olderworkers are less flexible, innovative, andadaptable to workplace change thanyounger workers.

Un f o rt u n a t e l y, these negative employe rp e rceptions are reflected in work p l a c etraining practices. Older workers are infact less likely than their younger counter-parts to be trained by their employers. In anationwide survey of almost 1,500 estab-lishments, 70% of all employees hadreceived some formal training during theprevious year, while less than 51% ofworkers 55 and over had received suchtraining (Frazis, Gittleman, Horrigan, &Joyce, 1998).

Beyond The MismatchProblem

Labor-market mismatches and howemployers deal with adjustments inthe workplace are only two of the

issues raised by the aging of theCommonwealth’s workforce. There is asubstantial minority of older workers inMassachusetts who are not sharing in thecurrent prosperity. This group will contin-ue to be left behind unless stronger mea-sures are taken to bring them into themainstream economy.

Older Workers Who Are LeftBehindThe unemployment rates of older men andwomen without any post-secondaryschooling are well above those of their bet-ter-educated peers and their rates of labor-f o rce participation have declined since1990 (see Table 10 and Re s e a rch Brief #21,

2 6

1999). Older male workers with less than12 years of schooling experienced a near30% decline in their real annual earningsduring the same time period. Ol d e rwomen who have not graduated from highschool earned less in real terms in the mid-1990s than they did in 1979 (Re s e a rc hRe p o rt #13, 1998). Many older work e r swho are left behind suffer from multipled i s a d vantages such as low education, poorfluency in English, spotty work experience,d i s a b i l i t y, and discrimination. In addition,limited pre - re t i rement earnings of olderw o rkers reduces their pension income, andplaces them at risk of long-term pove rt yduring their re t i rement years. In a d e q u a t epension income and pove rty are part i c u l a r-ly a problem of elderly single women.

While a large part of these earnings’ prob-lems reflects general trends affecting allpoorly educated workers in the economy,the particularly severe hardship of perma-nent job loss has also been a contributingfactor. Estimates for New England, for

example, show that approximately 1 in 4older workers were permanently displacedfrom their jobs between 1988 and 1997(Research Brief #9, 1998).

Older dislocated workers tend to experi-ence greater difficulties in obtaining re-employment than their younger counter-parts. In the mid-1990s, only about twothirds of dislocated workers 45 and olderin New England we re able to re g a i nemployment, compared to over 80% ofthose under 45. This number falls to lessthan 50% for dislocated workers 55 andolder and for those in this group lacking ahigh school diploma. Many of the long-term unemployed older workers becomediscouraged and stop looking for work,thereby shrinking the size of the region’slabor force (Research Brief #1, 1999).

When older dislocated workers do becomere-employed, they often incur substantialearnings losses. For example, those olderdislocated workers 45 and over who hadobtained re-employment in New Englandin the mid-1990s were only able to replacean average of 72% of their former weeklyearnings, due to a combination of fewerhours of work and reduced real hourlyearnings (Re s e a rch Brief #9, 1998).5

Dislocated workers who are unable toregain employment in their career occupa-tions incur the greatest earnings’ losses.

The failure of some older workers to ben-efit from the booming economy haswidened inequality and increased rates ofpoverty and income inadequacy amongolder persons in Massachusetts (ResearchReport #11, 1998). Using an income stan-

2 7

Source: 1996 monthly CPS sur vey, public use files, tabulations byCenter for Labor Market Studies

TABLE 10

Unemployment Rates of 45- 69-Year-Old Persons in Massachusetts, by Educational Attainment, 1996

(Annual Averages in Percent)

Educational Attainment Rate

All 3.6

Less than High School 7.0

High School Graduate/GED 3.9

Some College; Associate’s Degree 2.9

Bachelor’s Degree or Higher 2.7

5For an earlier review of the post-displacement labor-market experiences of older workers in the United States dur-ing the 1980s, see Sum & Fogg, 1991.

dard of 125% of the federal government’sofficial poverty line (equivalent to $13,500for a two-person family and $20,500 for afour-person family in Massachusetts in1997), the Commission estimates thatapproximately 11% of the state’s residents45-69 years old have inadequate income(Research Report # 6, 1998).6 However,this fraction rises to nearly 30% for olderresidents with fewer than 12 years of for-mal education.

As is true nationally, a rising share of theseolder disadvantaged persons in Ma s s a -chusetts have come to rely on some formof public assistance income to supportthemselves and their families, includingSocial Security Disability and Su p p l e -mental Security Income payments, Emer-

gency Aid to the Elderly and DependentChildren, and food stamps. Because thereare few substantive links between theseincome support programs and theCommonwealth’s employment and train-ing system, as is also the case nationally,many of these older workers tend to bepermanently lost to the work f o rc e(Research Report #5, 1997).

The Commission’s estimates of availablelabor reserves provide a rough measure ofh ow many older workers in theCommonwealth were being left behind byeconomic growth over the 1995-97 peri-od.7 Among the almost 200,000 olderworkers whom the Commission estimatedto be unemployed, undere m p l oyed, orpart of the hidden unemployed (see Table

2 8

(Note: The totals in column E do not include double counting, thus they are smaller than the sum of thenumbers in Columns A-D. An income twice the poverty level for a family of four is roughly equivalent to halfthe median income in the Commonwealth in the late 1990s)Source: Research Report #9, 1998

TABLE 11

The Distribution of the Older Universe of Need b y Type ofLabor-Market P roblem, 1995-97 A verages

(A) (B) (C) (D) (E)

Age/Family Discouraged Low WeeklyIncome Group Unemployed Underemployed Workers Wages All

56-69 Year OldLess Than 1.25 times Poverty 1,572 3,246 3,965 3,226 12,005Less Than 2.00 times Poverty 3,636 3,526 5,669 8,546 21,377All Income Groups 15,947 11,493 17,838 31,883 74,763

45-54 Year OldLess Than 1.25 times Poverty 6,506 3,236 5,486 11,822 23,227Less Than 2.00 times Poverty 9,678 6,792 7,918 25,138 43,881All Income Groups 30,923 22,363 15,686 52,364 114,889

6The Commission is aware of the serious limitations in applying the federal poverty standard as a measure of basicincome needs in a state like Massachusetts where housing costs are unusually high, or to older persons who often havebasic needs that are not adequately reflected in the poverty standard (Fogg, Sum, & Mangum, 1999). A more suitablebenchmark for Massachusetts is a standard that is tied to Massachusetts incomes. One example of such a standard isto use one half of the median family income in the Commonwealth, which corresponds to about twice the federalpoverty income standard.

7Improved labor-market conditions in 1998 and early 1999 have likely reduced the size of these older labor reserves.

11, Column E), one in five were in thepoorest families in the Commonwealth(those with incomes below 125% of thepoverty line), and one in three earned lessthan 200% of the poverty income line($32,000 for a family of four, which isroughly equivalent to one half the medianfamily income in the Commonwealth).

The Voices of Those Left Behind Statistical evidence can document themagnitude and incidence of the labor-market problems encountered by olderworkers. However, statistics are a sterileindicator of the day-to-day experiences ofthese older workers who are in need ofm o re training and better jobs. T h eCommission has learned firsthand aboutthese employment problems through fivefocus group meetings with older men andwomen in Massachusetts (Research Report#14, 1999).8 These focus groups under-scored the wide range of backgrounds ofolder persons in need of employment andtraining assistance. Participants rangedfrom low-skilled blue collar workers toprofessionals and from persons who hadrecently lost their jobs to those who wereseeking work for the first time.

Most participants were convinced that agediscrimination played a key role in theirdifficulties acquiring new jobs. T h e ydescribed situations of being told: "You areoverqualified," "The job has already beenfilled" (despite clear evidence that it wasstill open), or that the company was not

looking for senior people. Participants alsohad strong impressions that companiesbelieved that hiring more older workerswould raise their health and disabilityinsurance costs without considering thatthere might be offsetting advantages inother performance areas, such as goodattendance rates. There was a further sensethat human resources staff responsible forhiring were often young and unfamiliar oruncomfortable with older workers.

Participants recognized their need for newor upgraded skills – ranging from acquir-ing a GED, to writing a resume andpreparing for an interview, to learning howto use modern office equipment – andthey expressed a willingness to invest timeand effort to acquire appropriate training.Many stressed that minimal exposure tobasic computer skills would not be enoughto provide them with the confidence orcompetence required by most jobs. Theyfelt that there should be opportunities forextensive hands-on experience, both usingcomputers on site (many did not havehome computers), and within the contextof unpaid internships (preferably whilethey were still eligible for unemploymentbenefits).

Many participants also expressed their lackof personal confidence, especially aroundissues of searching for a new job. Olderwomen, especially, described the need forcounselor-led support groups as well asmore traditional training and employmentservices, to strengthen their self-esteemand to provide a source of networking.

2 9

8Eighty-one individuals, varying in age from 45 to 77 years and representing a range of educational levels andemployment experiences, participated in these five focus groups. In each group, a series of questions was askedabout the participants’ recent employment and job-search experiences as well as the training assistance they werereceiving from state and local employment programs. Responses reflected the experiences of older persons in bothurban and rural areas of the state, including Boston, Lawrence, New Bedford, Springfield, and Greenfield.

3 0

Those Who Are Left Behind

John is a 58-year-old married, college graduate. He was retired early from

a highly paid managerial position at a large computer company. His pension

package is not adequate to cover his family’s expenses. John would like a com -

parable job, but has been unsuccessful in finding anything other than short-term

consulting assignments, even though he is willing to accept a lower salary. John

is suffering from depression and could use some counseling. He would also like

to attend higher-level computer courses to expand his employment credentials.

Mary is a 54-year-old divorcee with a BS degree (earned eight years ago,

after her children left home) and almost no savings or personal assets.

While previously employed as a sales manager, she worked the past seven years as

a hospital lab technician (earning $20,000/year) until the hospital downsized.

She looked for work in the medical field while collecting unemployment benefits,

but found that she needs additional courses to compete for jobs that require cer -

tification in her field. Mary was not informed about the option of receiving

extended unemployment benefits while in training until after the eligibility

deadline had passed and she is ineligible for the JTPA Older Workers program.

Susan is 56 years old and recently widowed. She has a BA degree and sec -

retarial experience, but has not worked since starting her family 30 years ago.

She needs to work because she has little savings and no pension. She is also car -

ing for her elderly mother in her home. Susan has minimal computer skills and

feels she needs subsidized courses in basic computer use, job search skills, and

assertiveness training. She may need assistance in caring for her mother while she

is in class and later if she is successful in finding employment.

Those Who Are L

3 1

R ichard is 66 years old and married. He has a high school diploma and

retired a few years ago as a non-skilled worker. He wants a part-time job

to supplement Social Security and to provide a sense of purpose in life. Richard

lacks current labor-market skills. He would like job counseling and job search

assistance to find a meaningful part-time job and is willing to attend training

sessions or courses, as appropriate.

Michael is a 49-year-old single, high school graduate. He was recently

laid off from a skilled job in a sheet metal shop when the company closed.

Michael worked there 25 years and had become a unit foreman, earning

$33,000 a year. He received no pension and has been unable to find another

job for which he has the appropriate level of technical experience. (Many man -

ufacturing companies required specialized computer-assisted processes for which

he needs training.) He would like assistance finding a skilled job similar to ones

he has had (at a minimum of $12 per hour) and opportunities for specialized

technical training.

Danielle is a single 50-year-old high school dropout with mild learning

disabilities. She has two teenaged children still at home and is also rais -

ing her oldest daughter’s child. However, she is no longer eligible for welfare ben -

efits having reached the two-year time limit, and although she would like to

return to work, she does not feel she has the skills to find a job that will support

her family. She needs to learn computer skills to help her find higher paying cler -

ical work, but would need support for her family while obtaining training and

finding a suitable job.

Left Behind

The Adequacy ofEmployment and TrainingResources

Massachusetts offers a dive r s earray of employment andtraining programs for address-

ing labor-market mismatches and theemployment and training needs of olderworkers. These programs are funded undermany different statutory authorizations,and eligibility for some programs isincome-tested.

Most of the short-term training programshave been operated under the federal JobTraining Partnership Act (JTPA), which isto be replaced by the new WorkforceInvestment Act (WIA) as of July 1, 2000.Among the more important of the JTPAprograms are:

• Title IIA programs, providing an array ofe m p l oyment and training services toeconomically disadvantaged adults 22and older.

• Title III programs, offering employment-related services to workers who are dis-placed from their jobs.

• Section 204(d) older worker programs,which provide various types of employ-ment-related services to disadvantagedolder workers 55 and older.

T h e re are also subsidized part - t i m ee m p l oyment opportunities for low -income individuals 55 and older through

the Senior Community Service Employ-ment Program (SCSEP) funded underTitle V of the Older Americans Ac t .However, with the exception of Title IIIprograms for dislocated workers, eligibilityfor all of these programs is primarily limit-ed to workers with incomes at or below125% of the Massachusetts poverty level,roughly $13,500 for a family of two(1997) and $20,500 for a family of four.

In addition to these relatively short-termemployability assistance programs, thereare several statewide education and skill-training programs for which older workersare eligible without an income test. Forexample, adult basic education programsprovide English literacy training and highschool equivalency programs and theCommunity College system offers bothbasic and advanced-skills training. Theunemployment insurance system providesfor up 30 weeks of regular unemploymentbenefits and up to 18 weeks of "Section30" (General Laws of Massachusetts, ch.151A:30) extended benefits for unem-ployed persons participating in approvedtraining programs.

Although the needs of participants in theseprograms overlap considerably, there is nosingle entity responsible for coordinatingand monitoring all of these programs. Noris there any way to get an overall picture ofhow effectively the older worker popula-tion is being served.

Federal and state guidelines govern theJTPA planning and delivery system, with

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implementation being decentralized toregional employment boards located in 16Service Delivery Areas across the state. Thestate’s Executive Office of Elder Affairs mon-itors the SCSEP programs, the Division ofEmployment and Training is responsible forthe Workforce Training Fund’s employer-based programs for incumbent workers, andthere are separate coordination and monitor-ing systems for occupational education pro-vided through community colleges and fortraining programs under the auspices of theMassachusetts Rehabilitation Commission.

Various coordinating and monitoring respon-

sibilities for programs are also held by the

MassJobs Council (MJC), the Corporation

for Business, Wo rk, and Learning, the

De p a rtment of Labor and Wo rk f o rc e

De velopment, and the Division of

Employment and Training. Despite recent

efforts to improve coordination among these

agencies, the key workforce development pro-

grams in the Commonwealth continue to

operate with considerable independence from

one another and there is too little meaningful

cooperation among the states’ key policy-

making organizations, such as the

De p a rtment of Labor and Wo rk f o rc e

Development, the Division of Employment

and Training, the Department of Education,

the Board of Higher Education, the

Massachusetts Jobs Council, and the

Community College system.

Under-funded ProgramsMassachusetts received about $34.6 millionin training funds for adults under Titles IIAand III of the JTPA in FY 1998. BecauseJTPA funding allocations are based on fac-tors such as poverty and unemployment,prosperity in Massa-chusetts has resulted infewer training resources. Another $8.4 mil-lion (FY 1998) was provided for veteranstraining programs and trade adjustmentassistance and there was $16.4 million offederal funding (FY 1998) for employmentservice activities under the Wagner–PeyserAct. Massachusetts also received a federalblock grant for welfare to work assistance of$20.6 million (FY 1998) to which $2 mil-lion in state funds was added, about $2 mil-lion for subsidized work experience adminis-tered by the Senior Community ServiceEmployment Program, and over $45 million(FY 1998) for various vocational rehabilita-tion activities.

The Community College system, by com-parison, received a state allocation of over$181 million (FY 98) and its budget hasbeen growing by about 8% a year since1993. Adult Basic Education funding,almost three fourths of which comes fromMassachusetts, has more than tripled sinceFY 1997 and now stands at almost $37 mil-lion (FY 1999). Other major pro g r a m sreceiving state funding in FY 1998 includedprisoner education, On e - Stop Care e rCenters, and the Corporation for Business,Work, and Learning, for a total of $11.3million. However, the information on thenumber of older persons served and thetypes of educational services they are receiv-ing is very limited.

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Despite what may appear to be substantialsums budgeted for work f o rce deve l o p-ment, the resource base is relatively thinwhen compared to the needs of theCommon-wealth’s workforce. For exam-ple, the number of older persons partici-pating recently in employment and train-ing programs in Massachusetts rangedfrom 408 in JTPA Older Worker programsand 417 in JTPA Title IIA programs to ahigh of nearly 4,700 in JTPA Title III dis-located worker programs (Table 12). Thetotal number of older persons participat-ing in these three JTPA programs duringp rogram year 1996 was 5,492. T h e s enumbers, however, represent only a tinyfraction of workers who meet va r i o u sJTPA eligibility criteria, let alone the larg-er universe of need identified by theCommission.

Only one in 500 older workers eligible forTitle IIA programs typically receives anye m p l oyment and training assistance(Research Report #12, 1998). Even if thealmost 1,400 participants (1997) in pro-grams specially dedicated to helping olderworkers (the JTPA Older Worker Programand those in the Senior CommunitySe rvice Em p l oyment Programs) areincluded in these totals, Massachusetts isonly serving approximately 1 in 100 of thetotal number of older persons who are eli-gible for assistance under such programs,even before the recent cuts in federal fund-ing (Research Report #12, 1998).

While these numbers largely reflect theoverall underfunding of education andtraining programs, older workers do notalways receive their proportionate share ofthese limited resources. For example, olderworkers in Massachusetts comprised only11% of the total number of participants inJTPA Title IIA programs during PY 96,well below their estimated 41% share ofthe JTPA Title IIA eligible populationduring the same year (Research Report#12, 1998). Similarly, even though thepercentage of participants 45 and older inAdult Basic Education programs rose from16% in the early 1990s to 21% in the1996-97 and 1998-99 fiscal years, this isstill considerably below their share com-pared to the general population. The oneprogram where older workers have beenslightly over-represented is in the JTPATitle III programs for dislocated workers;they accounted for 43% of the total num-ber of participants in PY 1996.

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TABLE 12

Number of Older Persons (45+) Participating in SelectedEmployment and Training P rograms in Massachusetts

During Program Year 1996

(A) (B) (C)Number of Older as

Older Total PercentProgram Participants Participants of Total

JTJPA Title IIA 417 3,855 10.8

JTPA Title III 4,667 10,730 43.5

JTPA Older Workers 408 408 100.0

SCSEP 1,389* 1,389 100.0

*Note: Data refer to number of slots rather than participants.

Sources: PY 1996 SPIR Information System, public use file, calculated by theCenter for Labor Market Studies.

Program OutcomesWith the exception of JTPA programs,there is no systematic evaluation of post-program outcomes, and even most JTPAoutcome data are short-term. It is, there-fore, impossible to determine how effec-tive these limited resources have been inproviding either permanent remediationof employment problems or the long-termimprovement of earnings.

What the limited data for JTPA programsshow is that the outcomes for older partic-ipants in Massachusetts compare ve ryf a vorably with those of older work e r snationally. For example, approximately70% (compared to 62% nationally) of allolder persons terminating from Massa-chusetts JTPA Title IIA programs in PY 96were able to obtain employment uponleaving the program (Table 13). Theemployment rate for older Title III partic-ipants was also higher in Massachusettsthan nationally (72% vs. 68%). Likewise,wage "outcomes" (wages re c e i ved byemployed terminees from these programs)

for older Title IIA and Title III termineesin Massachusetts have consistently outper-formed those nationally (Table 13).

Another key outcome for JTPA Title IIIp rograms is the replacement wage – thep e rcent of their previous hourly wage thatp rogram graduates re c e i ve upon re e m p l oy-ment. Over the past few years, the medianwage replacement rate for Ma s s a c h u s e t t solder workers has ranged from 84%( Program Year 1993) to 90% (Pro g r a mYear 1996) and is 6 percentage points orm o re above the national average for Ti t l eIII programs (Re s e a rch Brief #20, 1999).

However, even with these relatively highreplacement wages, older workers typicallyexperience substantial earnings’ losseswhen they are re-employed. Older work-ers in New England who are dislocated(separate data for Massachusetts areunavailable) work fewer hours in additionto receiving lower hourly pay when theyare re-employed so that their weekly earn-ings decline on average by 30% (ResearchBrief #9, 1998).

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Sources: PY 1996 SPIR Information System, public use file, calculatedby the Center for Labor Market Studies.

TABLE 13

Selected Employment and Wage Outcomes for OlderPersons (45-69) Terminating from JTP A Title IIA, Title III and

Section 204 (d) P rograms During PY 1996

Median MeanEmployment Rate Hourly Wage Hourly Wage

Program U.S. Massachusetts U.S. Massachusetts U.S. Massachusetts

JTJPA Title IIA 62.3 70.3 $7.00 $8.25 $7.73 $8.75

JTPA III 67.9 71.7 $9.37 $11.20 $11.47 $15.36

Section 204 (d) 62.5 69.7 $6.00 $8.00 $6.87 $8.75

Participant AssessmentsThe Commission’s focus groups providefurther insights into how program partici-pants view JTPA programs. The majorityof focus group members had recent expe-rience with JTPA-funded training, andthey described a number of ways that thistraining could better meet the needs ofolder job seekers.

Many would have liked more opportuni-ties for comprehensive evaluation of theirindividual skills, training needs, and careergoals, which would then be linked withreferral to appropriate training programsor courses. They stressed the importanceof computer training, but felt that itshould be targeted to specific career areassuch as word processing, working withspreadsheets, graphic design, and manu-f a c t u r i n g - related computer capacitiesrather than to computer literacy. In addi-tion, many expressed a need for additionaltime to absorb new information andacquire new skills and thought that cur-rent training programs were too short induration.

Moreover, they wanted greater access tocourses addressing their individual careerneeds. Dislocated executives or computerengineers may need high-level technicalcourses to prepare them for a new job,while dislocated assembly-line work e r smay need to learn new technical skillssince many manufacturing jobs are nowcomputerized. Other individuals, such asmedical technicians, need to upgrade theirskills for re-certification.

Focus-group participants also wanted bet-ter information about extended unem-

ployment benefits available to those intraining programs, along with applicationdeadlines, and they felt that more infor-mation should be provided about availabletraining programs, especially those offeredoutside JTPA sites. They further thoughtthat JTPA programs should be more wide-ly available to older workers, not just forthose who had low incomes, and werecomfortable with the concept of a slidingfee scale for training and placement ser-vices based on income. The clear messagefrom discussion group participants wasthat training opportunities should be morec o m p re h e n s i ve, directly transferable tojobs, and more individualized.

The Promise of New ProgramsTwo new legislative initiatives incorporatei m p o rtant new directions for policy thath a ve enormous implications for older work-ers. The Commonwe a l t h’s Wo rk f o rce Tr a i n -ing Fund provides substantial re s o u rces fortraining incumbent workers and assistinge m p l oyers with training. It has no age orincome eligibility restrictions and the statutee x p ressly provides that low skill, low - i n c o m ew o rkers and employers with inadequatecapacities for training will re c e i ve priority.9

The appropriation for these programs in thelast half of fiscal year 1999 (Ja n u a ry – Ju n e )was $9 million, with $18 million appro p r i a t-ed for the following two years and $9 millionfor fiscal year 2002.

The Workforce Training Fund is a poten-tially important program for helpinge m p l oyers alleviate labor scarcities andmismatches in the Commonwealth, par-ticularly by retraining and upgrading older

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workers. Over 62% of the state’s underuti-lized workers 45 and older are currentlye m p l oyed and, there f o re, eligible foremployment and training services throughthe Fund’s programs (see Table 11). Aboutone fourth of currently employed workers45 and older are also a likely target for theFund’s services because of their probabilityof being laid off in the next decade andexperiencing the earnings’ losses thatinevitably accompany the displacement ofolder workers.

The second major policy change is the fed-eral Workforce Investment Act (WIA),which replaces JTPA with a new systemthat consolidates funding for training pro-grams for disadvantaged adults. WIA alsoestablishes a "On e - Stop" local serv i c e -delivery system for assessing the needs ofworkers and providing information on joband training opportunities, stre n g t h e n sp rogram planning and coord i n a t i o nresponsibilities, and increases performancea c c o u n t a b i l i t y. Training will largely beprovided through a voucher system of"Individual Training Accounts." Separatefunding streams for youth, adults, and dis-located workers will be retained underWIA, but special programs for disadvan-taged workers 55 and older, such as theJTPA Section 204(d) program, have beeneliminated.

T h e re are no income-eligibility re q u i re-ments for core assessment and placements e rvices provided to adults through theOn e - Stop service delive ry system. Ec o n o -mically disadvantaged workers and thoseunable to obtain employment have priorityfor more intensive assessment and trainingassistance, but these services may also bep rovided to higher-income workers whoface serious barriers to employ m e n t .1 0 Inaddition, payments for transportation andt e m p o r a ry stipends are permitted to sup-p o rt participation in training.

Un f o rt u n a t e l y, Ma s s a c h u s e t t s’ share ofnational funding under JTPA has beenfalling as the state’s unemployment ratehas dropped. The Commonwealth’s fund-ing under WIA is expected to remain atthe same level as under the last year ofJTPA, and there is the possibility of a fur-ther decline in federal support if theMassachusetts economy remains strong.In either event, the pattern of under-fund-ing of federal workforce development pro-grams in Massachusetts will continue.

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9The Commission notes with concern that neither the current regulations governing the Workforce Training Fundnor the information contained in Request For Proposal documents incorporate the express statutory priority givento serving the low-wage, low-skilled workers.

10For a review of the key provisions of the WIA legislation, see Fogg et al., 1999.

A New Agenda forWorkforce DevelopmentPolicy

The economic imperatives fori n vesting more in the humanre s o u rces of the Commonwe a l t h’s

older workers are substantiated in thisre p o rt. Some of this new investment willcome from employers who are facingg reater scarcities of entry labor. Some willbe made by workers who want the skillsneeded to take advantage of new and bet-ter-paying job opportunities. Howe ve r,state government will also have to prov i d em o re leadership and stronger financial sup-p o rt for work f o rce development, and morea g g re s s i ve outreach to encourage part i c i p a-tion in work f o rce development pro g r a m s ,than it has in the past if the Common-we a l t h’s growth is to be sustained.

The importance of increasing the state’srole in workforce development is under-scored by the extent of the adjustmentsthat must be accomplished. Many of theolder workers upon whom the Common-wealth will depend to meet its labor scarci-ties are either economically disadvantagedor have been displaced from jobs in declin-ing industries. Most of these workers lackthe resources to pay for new skills andmore education. Second, employers typi-cally under-invest in the people fillingentry jobs because new employees maychange jobs after they are trained. Evenwhen employers are willing to provide

training, they may not be able to do so.This is often the case for the smallest pri-vate sector companies, non-profit organi-zations, and state and local governmentsthat lack adequate workforce developmentcapabilities.

Meeting the human resources needs of thisdecade will not require the creation ofe x p e n s i ve new training institutions.Massachusetts is already richly endowedwith a wide array of education and train-ing organizations that can contribute tobuilding the skills and improving theincomes of older workers. What is mainlyneeded is a better system for mobilizingexisting resources and sufficient additionalfunding to address the growing problemsof labor scarcities and skill mismatches.

Too often in the past, existing programshave not had the resources or the incen-tives to respond effectively to the chal-lenges of workforce development. JTPAprograms have often favored quick, low-cost solutions to employability problems,p o s t - s e c o n d a ry occupational educationhas not been required to demonstrate itscontribution to long-term labor-marketsuccess, and subsidized work programshave been used to supplement incomes,rather than as a stepping stone to higher-wage unsubsidized employment. The pre-dictable result is that skill upgrading is lessrobust than it should be, and workersoften end up being placed in the kinds ofjobs that perpetuate inadequate earnings(Fogg, Mangum, & Sum, 1999).

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The Commission’s recommendations foraddressing both the economic needs ofolder workers and the growing scarcities oflabor in Massachusetts provide an overallblueprint for change. Their focus is onwhat the goals of public policy should be,how government can redirect existing pro-grams and make them more effective, andwhat resources are needed in this decade tomeet the Commonwealth’s most urgentworkforce development needs. First prior-ity in achieving these goals must be toassist those with the least resources and themost serious employment disadvantages.

The key elements of this blueprint are: (1)concentrating all elements of the work-force development system on achievinghigh-quality job placements and the long-term economic upgrading of the work-force, (2) harmonizing eligibility criteriaand training curricula among publiclyfunded programs so that participants canmove easily from one level of training toanother throughout their working lives,(3) establishing an evaluation process thatcan contribute feedback for improv i n gprograms, as well as monitoring long-termprogram performance, (4) targeting work-force development resources on reducingskill scarcities so that workforce develop-ment supports economic growth, and (5)ensuring that older workers receive theirproportionate share of employment andtraining resources, with first priority givento those with the most serious barriers toemployment.

Some of the recommendations highlightspecific steps that must be taken to enhancehuman re s o u rces investments in olderw o rkers. But most of the re c o m m e n d a t i o n s

apply more generally to improving the ove r-all operation of the Commonwe a l t h’s work-f o rce development system.

Assessment and Placement

Employment and training services must bedriven by a thorough assessment of needson both the demand and supply sides ofthe labor market if they are to address thetwin problems of labor-market disadvan-tage and labor scarcities. Demand assess-ment should identify current and project-ed job openings by occupation and skilllevel and pinpoint persistent skill scarcitiesof the kind that are likely to create growthbottlenecks. Supply assessment must beuniversally available, customized to theneeds of individual participants, and suffi-ciently intensive to determine what specif-ic human re s o u rces investments arere q u i red to pre p a re workers for jobsrequiring scarce skills.

These types of demand and supply assess-ments should lead to high-quality jobplacements and substantial upgrading forolder workers with employment disadvan-tages. In practical terms, this means thatthe performance target for all publicly sup-p o rted training, job-development, andjob-placement programs should be toplace participants in jobs that pay at least85% of previous earnings, or in which payis equal to at least 50% of the median fam-ily income in the Commonwe a l t h ,w h i c h e ver is gre a t e r. These placementstandards are more demanding than thoseset by the WIA, but they are less thanthose currently being achieved by JTPATitle III programs in Massachusetts. Such

3 9

earnings goals are essential for realizing thehigh-quality workforce development sys-tem envisioned by the Commission.11 Forpre-vocational programs, such as thoseproviding basic literacy or GED prepara-tion, rigorous competency-based standardsshould be substituted for performance cri-teria based on earnings improvement.

Achieving these performance goals willrequire a broadening of the availability ofintensive assessment and placement ser-vices. The One-Stop career centers underthe WIA are to be the mechanism for pro-viding publicly supported assessment andplacement activities. On e - Stop centers,however, are only obliged to provide "uni-versal access" to relatively low cost types oflabor-market information and job-searchassistance. More intensive services are lim-ited to workers who meet re s t r i c t i veincome tests. This limitation means thatsome workers in need of more intensiveassessment and placement services, such asolder workers switching jobs or makingsubstantial career changes, will be ineligi-ble for more intensive assessment andplacement services, and the higher costs ofthese services may also limit the extent towhich they are available for the mostseverely disadvantaged.

Because these limitations will hampere f f o rts to reduce labor-market mismatches,the Commission recommends that theclearinghouses for job and training pro g r a minformation that are to be located in On e -Stop Centers be more compre h e n s i ve thanthat re q u i red by the WIA. For example,information on program perf o r m a n c e

should be collected for all public and pri-vate programs offering employment, train-ing, and counseling services in the locala rea. This should include program size andfunding levels, the number and demo-graphic characteristics of participants, andsummaries of the results of participant ande m p l oyer satisfaction surveys, as well as tra-ditional indicators of program perf o r m a n c esuch as job-placement rates and placementwages. These expanded information ser-vices should be adve rtised through commu-nity organizations that have frequent con-tact with older persons, and the informa-tion should be available in an electro n i cform that is easily accessible by individualsand local community organizations.

Finally, the guidelines for identifying skillscarcities and mismatches need to be madem o re precise. The WIA proposes thatworkforce investments be guided by crite-ria such as "job vacancies" or "in-demand"jobs. These concepts, by themselves, aretoo vague to define the job quality, wagestandards, and skill scarcity criteria thatshould be central to all workforce-develop-ment and job-placement efforts in theCommonwealth.

Recommendations onAssessment and Placement

• Use quantifiable criteria, such as whetherwages and working conditions meet pre-vailing labor-market standards, howmuch training is required, and the per-manence of employment prospects todetermine which jobs should be the tar-gets for training and placement efforts.

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•

11Ambitious earnings’ goals often invite programs to first serve those who are easiest to employ at the expense ofthose with the most severe employment handicaps. The Commission’s recommendations on program evaluationare intended to prevent such "creaming" in the selection of program participants.

• Adopt job-development and job-place-ment standards for all publicly support-ed occupational education, skill training,on-the-job training programs, andapproved training programs for personsreceiving extended unemployment bene-fits based upon the goal that participantsbe employed in jobs that pay at least85% of their previous earnings, or inwhich pay is equal to at least 50% of themedian family income in the Common-wealth, whichever is greater.

• Adopt rigorous standards of accomplish-ment and competency for pre-vocation-al programs, such as basic literacy andGED preparation.

• Offer intensive assessment to all Work-f o rce In vestment Act part i c i p a n t s ,unemployment insurance recipients, andother job seekers who are "at risk"because they are unlikely to be able toobtain employment that pays at least85% of the earnings of their previousjobs, or that results in an annual full-time income equal to at least 50% of themedian family income in the Common-wealth, whichever is greater.

• Ensure that all unemployment insurancerecipients receive intensive employabilityassessment and that those who are "atrisk" of not being able to earn 85% ofthe wages on their prior jobs or 50% ofthe Massachusetts median income,whichever is greater, are clearly informedof opportunities for extended benefitsunder the provisions of Sec. 30 of theunemployment insurance system. Suffi-cient time must be provided to apply forsuch benefits and assistance must be

available for completing the applicationprocess.

• Require One-Stop Centers to conductannual surveys to identify all education,training, and employability support ser-vice opportunities in their service areas.

• Require One-Stop Centers to provideinformation on program size, costs, par-ticipant characteristics, and pro g r a mperformance to applicants.

• Use the One-Stop Centers to determinewhether older workers have special sup-port- service needs, such as community-based work and family counseling, andto identify the availability of such pro-grams in the community.

• Create a technical assistance capacity inOne-Stop Centers for identifying "bestpractice" experience among employmentassistance programs for older workersand for disseminating this informationto local providers of employment andtraining services.

• Require that One-Stop Centers establishweb-sites with comprehensive programdata that are updated annually and jobopenings data that are updated at leastweekly.

Building a System of LifelongTraining and Education "Ladders"

The Commission’s vision is that the cur-rent patchwork of occupational educationand training programs be replaced by a"seamless" human resources developmentsystem that will give participants continu-ous access to learning and skill-upgrading

4 1

opportunities. Continuous or "lifelong"learning has traditionally been viewed as amechanism for updating skills in an econ-omy with a rapidly changing job structure( Marshall & Tu c k e r, 1993). T h eCommission is expanding this concept toinclude reducing the labor-market scarci-ties and mismatches that restrain employ-ment growth and providing stronger earn-ings’ incentives for keeping older workersin the labor market.

All publicly funded occupational educationand training programs must become partof an integrated system of work f o rce deve l-opment "ladders." This system shoulda l l ow workers to start on an entry "ru n g "commensurate with their needs and abili-ties and then build their skills and improvetheir earnings by moving from one trainingrung to the next. Because older work e r sh a ve such different needs and work experi-ence, it is particularly important that par-ticipants be able to combine programs ind i f f e rent ways over time.

T h e re are three principal components ofthis ladder system: (1) adult basic educa-tion, (2) short-term skill training, and (3)a d vanced skill training and occupationaleducation. Adult basic education pro g r a m sh a ve been increasing in recent years, butt h e re are still over 200,000 older persons(45-69) in Massachusetts who curre n t l ylack a diploma or GED cert i f i c a t e .1 2 Mo reneeds to be done to upgrade the literacyand math skills of this disadva n t a g e dg ro u p, and better linkages need to be builtb e t ween adult basic education and othereducation and training pro g r a m s .

Short-term skill training has been provid-ed mainly by JTPA programs. However,only a small fraction of eligible olderworkers are served by JTPA. This problemis likely to grow worse when special fund-ing for older worker training is eliminatedunder the WIA. Older workers havereceived their fair share of services underTitle III programs for dislocated workers.However, disadvantaged older workers aresubstantially underrepresented in Title IIAprograms for adults and those that do par-ticipate are less likely to receive as intensiveassessment or as much training as youngerw o rkers. The new Wo rk f o rce Tr a i n i n gFund provides additional opportunities forserving older workers who have jobs, andthere is a statutory requirement for servinglow-wage, low-skill workers.

Community colleges and other post-sec-ondary occupational education and train-ing schools constitute the highest rung ofthe workforce development system. Theseschools are particularly important becausethey are the main providers of longer-termprograms in intermediate and advancedskills for adults through both non-degreeand associate degree programs. Some com-munity colleges also operate On e - St o pCenters and offer adult basic educationprograms.

The occupational education programs ofcommunity colleges in Massachusetts havenot been systematically evaluated, butboth national and Massachusetts studiesshow that each year of attendance at acommunity college can improve earningsby about 7% to 8% (Kane & Rouse, 1995;

4 2

12This estimate is based on the findings of the February and March 1998 CPShousehold surveys for Massachusetts.

Sum et al., 1998). The Commission heardtestimony that community colleges aremoving in the direction of serving moreolder adults, and are also developing cre-ative ways of linking basic education andliteracy training with vocational skills.This trend towards meeting the long-termeducation and skill needs of older workersin Massachusetts needs to be reinforced,and efforts to address the critical staffingproblems of employers need to be furtherenhanced in the context of reforming theCommonwealth’s human resources invest-ment system.

Recommendations onOccupational Educationand Training

• Expand the five-year statewide compre-hensive strategic planning process underthe WIA to include all major occupa-tional education and training programs.The goal should be to create a fully inte-grated workforce development system tocoordinate programs operated under theWIA and the Wagner-Peyser Act, theWorkforce Training Fund, adult basiceducation, occupational education pro-vided by community colleges, trainingunder the Transitional Assistance Pro-gram for welfare recipients, and trainingsupported by the Social Security system.

• Develop uniform oversight proceduresand incentives to ensure that all organi-zations receiving federal and state fund-ing for skills training, occupational edu-cation, or work experience activities forolder workers coordinate these programswith skills training and work experience

provided through adult skills trainingprograms under the WIA, the WorkforceTraining Fund, and other statutorilysupported training programs.

• Require that the training and employ-ment services offered by the differentp roviders in this integrated systemrespond fully to the needs identified bythe employability assessment process.

• Ensure that older workers receive the

same opportunities for training as

younger workers by training staff to facil-

itate the enrollment of older workers in

w o rk f o rce development programs, by

monitoring the levels of service provided

to older workers, and by conducting reg-

ular "client satisfaction" interviews with

older program participants.

• Authorize changes in administrative rules

and procedures to encourage persons eli-

gible for extended unemployment to

e n roll in approved skills-training and

occupational education programs and

require that such programs be approved

as allowable training activities even if the

overall length of the program exceeds the

current 18 months, if such additional

training is necessary to secure re-employ-

ment at comparable wages.

Employers, Unions, and WorkplaceTrainingOn-the-job training and union appren-ticeship programs are an important com-plement to classroom training and occupa-tional education. The magnitude ofemployer-based training is substantial, and

4 3

•

it offers high economic payoffs to workers( Frazis, et al. 1998; Heckman, 1999;Lynch, 1994). Older workers, however, areunderrepresented in employer-based train-ing programs nationally (Frazis, et al.1998) and they represent less than 3% ofthe some 5,000 apprentices registered withthe Massachusetts Division of Apprentice-ship training.

Emerging labor scarcities are likely toencourage more workplace training ofolder workers, but the possibility thattrained workers may change jobs or retirebefore employers can realize the benefits ofthis training will continue to be a deterrentto workplace training. Public funding ofon-the-job training and cooperative pro-grams with other public training programscan strengthen employer incentives forworkplace training.

Wo rkplace training can also be enhancedt h rough public funding of technical assis-tance to employers. Technical assistanceshould be targeted to those employers whoa re most at risk from labor scarcities andskill mismatches and who have the leastcapacity to provide training. One suchg roup is the smallest private-sector firms.National data show that firms with 50 orf ewer employees employ a dispro p o rt i o n-ately large share of the older work f o rc e( Sum & Fogg, 1990) and are at greater riskof failure than larger firms (Brow n ,Hamilton, & Me d o f f, 1990). InMassachusetts, these small firms accountfor over one third of all jobs (DET, 1998)

and a special tabulation of data from a U.S.Bu reau of Labor Statistics survey show sthat such firms are 28% less likely to offerformal training than are larger firms( Massachusetts Institute for a NewC o m m o n wealth, 2000). A second group ofat-risk employers are in the social serv i c e sand business/personal services sectors,w h e re significant labor-market mismatchesa re likely (Re s e a rch Brief #8, 1998).

The Commission strongly favors expand-ing incumbent worker programs, such asthose provided under the Common-wealth’s new Workforce Training Fund, asa means of providing greater employertraining incentives and a stronger work-place training capacity in Ma s s a -chusetts.13 Workplace training programsare critical for reaching the large pool ofolder workers who are working, butunderemployed, and in anticipating theskill needs of the roughly 25% of the olderworkforce that is at risk of permanent dis-location and lower earnings in the comingdecade (see Table 11).

The Workforce Training Fund, however, iscurrently limited to private-sector employ-ers who are covered by the unemploymentinsurance system. Older workers accountfor 43% of all public-sector employees inthe state (1995), compared to fewer than30% of private-sector employees. Legis-lation will be needed to provide counter-part programs for incumbent employees inthe public sector.

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Recommendations forWorkplace Training

• Educate employers and unions about thes e ve re labor-market mismatches andsupply deficits emerging in the Massa-chusetts economy and encourage themto increase their human resources devel-opment efforts, particularly for olderworkers.

• Provide incentives and technical assis-tance to expand outreach programs andpartnerships between the public work-force development system and employ-ers and unions to better meet theemployment and training needs of olderworkers.

• Target training and technical assistanceresources under the state WorkforceTraining Fund to employers most in needof building their training capacity, such asthose with 50 or fewer employe e s .

• Ensure that low-wage, low-skilled work-ers are recognized as a priority group forservice in determining which programsare funded under the state WorkforceTraining Fund.

• Designate set-aside funding for traininginitiatives involving employers and/orlabor organizations that cut across theJTPA and the WIA regional ServiceDelivery Areas.

• Request that employers provide anassessment of the training and develop-ment needs of their employees, as well astheir firms, as part of the application fors u p p o rt under the state’s Wo rk f o rc eTraining Fund.

• Support the enactment of legislation toprovide training and technical assistancein state and municipal gove r n m e n tworkplaces comparable to that availableto private-sector workers under theWorkforce Training Fund.

Supported Work ExperienceThe Senior Community Service Employ-ment Program is one of the largest em-ployment and training programs in thestate that serves workers 55 and over. Inrecent years, it has provided over 1,300subsidized work opportunities for persons55 and older with incomes below 125% ofthe poverty line. While there has beennominal coordination between SCSEPprograms and the JTPA system in theCommonwealth, coordination is limitedbecause many of the job slots are con-trolled by national contractors withouts t rong ties to JTPA programs inMassachusetts. Inadequate coord i n a t i o nhas resulted in too infrequent pairing ofwork experience opportunities with train-ing or other forms of assistance to helpp a rticipants gain unsubsidized employ-ment. Because of this lack of emphasis onthe transition to unsubsidized employ-ment, some SCSEP participants remain insupported work for long periods of time.

Recommendations forSupported Work Experience

• Use the work experience slots underSCSEP as an on-the-job training com-ponent for workforce development andintegrate work experience with otherskill training programs.

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13 See also Appendix III containing the Commission’s recommendations for improving the Workforce TrainingFund.

• Encourage SCSEP work-experience pro-grams to provide transitional employ-ment experience in order to limit theperiod of time that individual partici-pants remain in subsidized employment.

Strengthening State Leadership inPlanning, Coordination, andOversightCoordination of fragmented and incom-patible employment and training pro-grams has been a goal of every major pieceof federal employment and training legis-lation for over 25 years, yet it has neverbeen achieved. While statute or adminis-trative practice in Massachusetts has oftenrequired coordination among these pro-grams, and formal coordinating mecha-nisms are often in place, meaningful coor-dination has been minimal. Im p rove dcoordination is promised once more underthe new Workforce Investment Act, butmay again prove to be an elusive goalunless decisive administrative steps aretaken to make it work.

Even though the WIA consolidates someprograms and strengthens the planningand technical assistance function at thestate level, there continue to be fundingand eligibility distinctions between train-ing programs for disadvantaged workersand those earmarked for dislocated work-ers. Other important pieces of the employ-ment and training system – the SCSEPprogram, transitional training assistancefor welfare recipients, adult basic educa-tion, vocational rehabilitation, occupa-tional education offered through commu-nity colleges, and incumbent worker train-ing under the Workforce Training Fund

–remain outside of the WIA planningumbrella. The resulting patchwork of pro-grams – serving different clienteles, meet-ing different needs, located in differentagencies, and funded under different leg-islative authorizations – makes it difficultto assemble the kind of coherent andongoing packages of services that are anessential feature of the integrated work-force development system advocated bythe Commission.

The Commission is well aware that onemore mandate for coordination runs therisk of being ignored or, worse yet, buriedin bureaucratic procedure. Nevertheless,the need for effective coordination isbecoming even more urgent as theCommonwealth’s workforce ages and itslabor scarcities become more severe. Thetradition of independent program territo-ries with inconsistent priorities, incompat-ibilities in eligibility, and uneven standardsof accountability is not working to the fulladvantage of the Massachusetts economyor its older workforce.

The new WIA, with its requirement fore f f e c t i ve state-level planning, coord i n a-tion, and monitoring, represents a goodmodel for a compre h e n s i ve statew i d ew o rk f o rce development system. T h eCommission recommends that this WIAplanning mechanism be broadened toinclude responsibility for setting policies,coordinating program activities, and over-seeing the performance of all publiclyfunded workforce development programsin the Commonwealth. The WIA plan-ning mechanism will ensure that all pro-grams operate with a common set of plan-

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ning goals, assessment procedures, andperformance standards. It would also har-monize training and occupational educa-tion curricula and reduce incompatibilitiesin program eligibility so that participantscould more easily gain access to lifelonglearning opportunities.

The Board should have sufficient staffresources to conduct regional and sectoralanalyses to inform the state-level planningprocess of trends in the industry and occu-pational employment structure, skill mis-matches, emerging training needs, andeducation and skill levels of the existingworkforce. This staff should have the pro-fessional competence to analyze labor mar-ket research, interpret national and stateprogram evaluations, and develop pro-gram and policy recommendations toguide the work of the Board in settingeffective workforce development policy.

Recommendations onPlanning, Coordination,and Oversight

• Establish an adequately staffed Work-f o rce In vestment Board to plan for,implement, and monitor the Commiss-ion’s recommendations.

• Require this Board to develop uniformoversight pro c e d u res for coord i n a t i n gand evaluating all publicly funded work-f o rce training programs in theCommonwealth, including adult skillstraining for older workers, adult basiceducation, incumbent worker training,supported work experience, training forwelfare recipients, and advanced skills

training and occupational educationprovided through community colleges.

• Appoint to this Board one or more mem-bers who have an in-depth knowledge ofolder worker employment issues to iden-tify special service needs of older workersand to identify special barriers to thesuccessful upgrading of older workers.

• Designate a single, high-level executivein state government to be responsible forimplementing Wo rk f o rce In ve s t m e n tBoard policies.

• Create a Massachusetts "21st CenturyWorkforce Development Commission"to monitor how technological change,w o rk f o rce demographics, and others t ructural changes are affecting theMassachusetts economy and its work-force development system. A standinga d v i s o ry committee on older work e rissues should be established within thisCommission.

Coordination and Delivery of Servicesat the Regional LevelCounterpart comprehensive planning andc o o rdination capabilities must also beestablished at the regional level within thestate. Massachusetts has long operatedunder a system of Regional EmploymentBoards responsible for the planning anddelivery of JTPA services in 16 ServiceDelivery Areas. This local planning struc-ture will be continued under WIA throughlocal Workforce Investment Boards.

The strengths of a decentralized system likethis are its familiarity with local employ-ment and training needs, its potential for

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hands-on coordination of diverse local-ser-vice providers, and its ability to hold thesel o c a l - s e rvice providers accountable for theirp e rformance. In practice, howe ve r, there s o u rces needed to support local pro g r a mplanning, coordination, and monitoringactivities have never been provided to theRegional Em p l oyment Board s .

WIA extends the logic of decentralizationone step further by allowing individualparticipants to develop their own cus-tomized assistance plans by using trainingvouchers. Shifting responsibility for choos-ing training programs from re g i o n a lemployment boards to individual partici-pants has the potential for improving thematch between training needs and trainings e rvices and could also make serv i c eproviders more accountable to the "mar-ket" for training. However, it also meansthat participants must be well informedabout the content and effectiveness of dif-f e rent program options. WIA assignsresponsibility for these increased needs forinformation, coordination, and account-ability to local One-Stop career centers.

The Commission endorses this concept ofa One-Stop service delivery system at thelocal level and recommends that this sys-tem be extended to provide workers withinformation, monitoring, and coordina-tion services covering all publicly fundedworkforce development programs at thelocal level. However, the Commission isconcerned that there may not initially beenough Centers to meet the needs of anexpanded workforce development system,that the effectiveness of the existing cen-

ters in Massachusetts has not yet beenestablished, and that employers and work-ers most in need may not have adequateaccess to services. Until sufficient One-Stop Centers are established to serve theolder worker population in need ofemployment and training services, andtheir efficacy has been demonstrated,other community-based organizationsshould be funded to provide such services.

Recommendations for theCoordination and Deliveryof Services at the LocalLevel

• Establish local work f o rce inve s t m e n tb o a rds that can undertake the samed e g ree of compre h e n s i ve planning asrecommended for the state-level Wo rk -f o rce In vestment Board and prov i d ethese local boards with sufficient re -s o u rces to accomplish this goal.

• Require these local boards to developuniform planning and oversight proce-dures for coordinating all publicly fund-ed workforce training programs withintheir planning areas.

• Appoint one or more members to theselocal boards who have in-depth knowl-edge of older worker employment issuesto identify special service needs and bar-riers to the successful upgrading of olderworkers.

• Complete the planned network of One-Stop Centers throughout the state anddetermine whether or not additionalcenters will be required.

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• Use community-based organizations andother placement organizations to supple-ment the On e - Stop system until it is fullyimplemented and its effectiveness has beendemonstrated, particularly with respect tos e rving low income communities.

Improving Program PerformanceThrough Accountability and LearningThe Commission has found an unfortu-nate lack of information about what work-force development programs have accom-plished, both in the Commonwealth andnationally, in terms of long-term improve-ment in the employment and earnings ofolder workers. Even less is known aboutthe contributions that training has madeto meeting employers’ skill needs.

JTPA programs report relatively completeinformation on the immediate post-pro-gram experience of participants, but fol-low-up data are more spotty and are limit-ed to a 13-week period after training.Most of the Commonwealth’s other work-force development programs are not as sys-tematically evaluated, and those that areevaluated often use inconsistent measuresof performance, which makes comparisonsdifficult. The types of evaluations thatmight provide insights into the strengthsand weaknesses of specific programs, suchas in-depth process evaluations and impactreviews, are rarely conducted. On balance,there is no systematic means for translat-ing the large body of program experiencein Massachusetts into useful lessons forimproving future programs.

One example of how the absence of eva l u-ations can stand in the way of improv i n g

p rogram quality is the initial deve l o p m e n tof the 8 "official" and 6 "unofficial" On e -Stop Career Centers in Ma s s a c h u s e t t s .These centers we re operated by ve ry differ-ent types of organizations – communitycolleges, community-based organizations,state and local government agencies, andf o r - p rofit firms – and they served some-what different clienteles. This diversity oforganizations, participants, and local labor-m a rket conditions provided a uniqueo p p o rtunity for assessing what works bestand why. Howe ve r, little uniform assess-ment information was collected, and thereis no systematic way to use the early expe-rience of the On e - Stops to guide the designof the remaining centers mandated by theWo rk f o rce In vestment Ac t .

The WIA calls for a number of new andm o re compre h e n s i ve data collectionefforts, including at least 6 to 12 monthsof follow-up data on the employment andearnings’ experiences of program partici-pants. Wage records from the unemploy-ment insurance system are to be the basisfor these future follow-up efforts, whichshould lower follow-up costs and improvereliability. In addition, WIA requires morecomprehensive measures of program per-formance, including participant andemployer satisfaction ratings, to be devel-oped for One-Stop centers.

The Commission believes these new per-formance indicators should be expandedto include sufficiently detailed informa-tion to identify the value-added contribu-tion of specific types of program interven-tions. The key performance indicatorsshould measure the wage and earnings

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i m p rovement of participants and theextent to which placements are meetingbona fide skill scarcities in the economy.

It is also important to track performanceover the long term to ensure that initialsuccesses are sustained and that earnings’gains that take a longer time to achieve getreflected in the performance data. Thewage record evaluations required underthe WIA should be extended to includeone-year and two-year follow-ups, espe-cially for the more intensive and costlyprograms. Participant and employer satis-faction surveys should also be conductedat the same intervals. These quantitativeperformance indicators should be supple-mented each year by in-depth process eval-uations of a representative sample of pro-grams in order to diagnose strengths andweaknesses of specific program interven-tions and delivery systems.

The Commission further re c o m m e n d sthat these WIA evaluation procedures berequired of all other major employment,training, and occupational education pro-grams that receive federal or state funding.Such evaluation is a key input into thec o m p re h e n s i ve program planning andcoordination system that the Commissionis recommending for workforce develop-ment in the Commonwealth.

Because sound evaluations require objec-t i ve re p o rting of information, fre e d o mfrom political influence and, most impor-tantly, preservation of the confidentialityof information provided by participantsand program administrators, the Commi-ssion recommends that the eva l u a t i o n

process be conducted by an independentresearch organization and that it be subjectto established federal government proce-d u res for ensuring the protection ofhuman subjects.

Finally, research and demonstration hasbeen an important element in improvingthe design of employment and trainingprograms. The earliest federal trainingprograms under the Area RedevelopmentAct of 1961 and the Ma n p owe rDevelopment and Training Act of 1962supported active R & D programs, as didthe Ford Foundation’s "gray areas" pro-gram that provided the blueprints formany of today’s workforce developmentp rograms. Provision for demonstrationprograms continues under the WIA. It isimportant that the Commonwealth tapWIA funds to develop and test innovativeprograms that are tailored to the needs ofthe Massachusetts economy and developc o u n t e r p a rt funding for demonstrationprograms for other types of publicly fund-ed workforce development programs.

Recommendations forImproving ProgramAccountability andPerformance

• Devise a common management informa-tion system incorporating detailed demo-graphic and socioeconomic characteris-tics of participants, for all publicly fund-ed employment and training pro g r a m sfor older workers in Ma s s a c h u s e t t s .

• Re q u i re that all programs document boththe types and the intensity of serv i c e s

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re c e i ved by program participants, includ-ing weeks and hours of program part i c i-pation in each component, modeled afterthe management information systemthat has been re q u i red under JTPA.

• De velop performance indicators thatmeasure success in improving the eco-nomic status of participants in terms ofwages and earnings as well as employ-ment. Correlate these performance indi-cators with the characteristics of partici-pants and the intensity of services to esti-mate the degree of economic improve-ment relative to the severity of employ-ment barriers.

• De velop counterpart indicators to mea-s u re the extent to which programs area d d ressing labor scarcities and skill mis-matches through employer surveys andthe analysis of the industrial and occupa-tional characteristics of job placements.

• Adopt performance standards for certify-ing WIA training programs, for approv-ing training programs for persons receiv-ing extended unemployment insurancebenefits, and for evaluating the perfor-mance of all other publicly supportedtraining programs based upon the goalthat clients be employed in jobs that payat least 85% of previous earnings, or inwhich pay is equal to at least 50% of themedian family income in the Common-wealth, whichever is greater.

• Provide incentives to programs to servepersons with the most serious obstaclesto employment and employers with themost serious skill scarcities.

• Establish an independent evaluation pro-gram, incorporating federal standard sfor maintaining confidentiality of infor-mation on individuals, to conduct long-term assessments of how well workforcedevelopment programs are performing.This evaluation should be based on boththe income improvements achieved forolder workers and success in meetingcritical skill scarcities. Follow-up shouldrely upon both unemployment insur-ance wage records and direct surveys ofparticipants and employers. These fol-low-ups should be conducted at intervalsof three months, six months, one year,and two years.

• Conduct regular process evaluations of arepresentative cross section of programs.

• Provide incentives for building linkagesbetween programs, such as public-pri-vate partnerships and programs thatcombine basic education with vocation-al preparation.

• Create set-aside funding at the state levelfor re s e a rch and demonstration pro-grams to address labor-market mis-matches through the training of olderworkers.

Resources and PrioritiesFor the first time in the post-war period,the Commonwealth is facing widespreadlabor scarcities that could seriously hobbleeconomic growth over the next decade.Un u t i l i zed and under-employed olderworkers, many of whom are in need ofnew skills, represent the largest labor re-serve available to the Commonwealth toclose the labor supply gap.

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Tapping this reserve, however, will requiresubstantial additional investments inw o rk f o rce development to correct skillmismatches and provide stronger incen-tives to older persons to remain in theworkforce. Part of the resources for meet-ing the Commonwealth’s workforce devel-opment needs can come from using exist-ing federal and state workforce develop-ment funds more effectively. A secondsource is to tap into available funding thatis underutilized.

For example, the trust fund that supportsextended unemployment benefits forunemployed workers who attend trainingprograms has been growing as the econo-my has prospered and state data show thatsuch training programs have generallybeen effective (Leonard, 1989). However,only about 2% of those who are eligiblefor such benefits in Massachusetts partici-pate in this program. Similarly, there areu n d e ru t i l i zed training funds ava i l a b l et h rough the Supplemental Se c u r i t yIncome (SSI) program and through transi-tional assistance programs for we l f a rerecipients that could be used to supple-ment JTPA funds for skills training andoccupational education for those eligiblefor such programs.

The reasons for these low rates of utiliza-tion are not known, but possible factorsinclude a low demand for training byw o rkers, inadequate information about thep rograms, or some administrative obstacle.Testimony before the Commission suggest-ed that a combination of lack of informa-tion about programs and conflicting policyo b j e c t i ves may be the cause. For example,

encouraging unemployed workers to takea d vantage of extended unemploy m e n tinsurance benefits could conflict with theo b j e c t i ve of keeping unemployment insur-ance payroll taxes from incre a s i n g .W h a t e ver the reasons, the Commissionrecommends that these programs be morea g g re s s i vely promoted and that any unnec-e s s a ry administrative barriers to their uti-lization be eliminated.

Even after these steps are taken, however,additional funds will be needed to fill inprogram gaps, harmonize eligibility crite-ria, provide more intensive work f o rc edevelopment services for those in need,and overcome the labor supply deficit. Forexample, approximately 40,000 to 50,000additional workers a year over the next fiveyears will have to be made job-ready if theprojected shortfall in labor supply is to beavoided. Many of these workers will haveto be persons 45 or older. Under the opti-mistic assumption that only about half ofthese workers will re q u i re intensiveemployability and upgrading services, andthat these services can be provided at anaverage cost of $5,000 per person, at least$100 million a year in new funding will berequired to finance this effort. These esti-mates represent a more than doubling ofthe number of adults served by JTPAtraining programs in recent years and afour-fold increase in the level of financialsupport provided under JTPA.

These increases are not unrealistic, prov i d-ed they are shared among all the differe n te m p l oyment and training institutions inthe Commonwealth. One of the largestcontributors must be the community col-

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lege system, which is already slated forbudget increases to expand long-term edu-cation services. Other contributions to thise f f o rt will have to come from W I A ,Ma s s a c h u s e t t s’ new Wo rk f o rce Tr a i n i n gFund, adult basic education programs, andtransitional assistance programs for we l f a rerecipients. The employer community ando r g a n i zed labor must also increase theirw o rk f o rce development efforts, part i c u l a r l yfor older workers, and higher-incomew o rkers must be expected to partially payfor training services through income-testedpayments and tuition loans. Should thisneeded expansion of the work force deve l-opment system not be fully achieved, theCommission feels strongly that the highestpriority for the system is to serve those low -income persons who are most in need andable to benefit from job training pro g r a m s .

Recommendations onResources and Priorities

• Provide sufficient supplemental statefunding to meet the labor market scarci-ties and skill mismatches of the Massa-chusetts economy.

• Provide sufficient supplemental statefunding to harmonize eligibility criteriaamong employment and training pro-grams operated under different legisla-tive authorizations.

• De velop a sliding scale of fees foremployment and training services basedon ability to pay, with those most inneed receiving services without charge.

• Use state-level planning and coordina-tion mechanisms to ensure that older

workers receive their proportionate shareof training resources.

• Give priority to serving those with thelowest incomes and most serious barriersto employment, if resources prove insuf-ficient to close the Commonwe a l t h’semployment and training gap.

Ensuring a Level PlayingField

Better work f o rce development pro-grams and stronger work incentive swill go a long way tow a rd addre s s-

ing the Commonwe a l t h’s labor scarc i t i e s .Howe ve r, ensuring that the potential con-tributions of older workers are fully re a l-i zed and that older workers re c e i ve a fairs h a re of the benefits from growth alsore q u i res equality of labor market opport u-n i t y. This has not always been the case.

Both the Commission’s focus groups andnational surveys re p o rt that employers areoften concerned about the capacity of olderw o rkers to learn new skills and adapt to thechanging re q u i rements of jobs and thattheir older employees re c e i ve less trainingthan their younger employees. Older work-ers also re p o rt encountering widespre a dp rejudice in the job market, with olderwomen experiencing the double jeopard yof age and gender stereotypes. This is con-sistent with age discrimination accountingfor roughly one in five complaints filednationally with the Equal Em p l oy m e n tOp p o rtunity Commission and 13% of

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those filed with the Ma s s a c h u s e t t sCommission Against Di s c r i m i n a t i o n( Bu reau of National Affairs, 1999;Massachusetts Commission Against Di s -crimination, Annual Re p o rt, 1997).

Whether the cause is intentional age dis-crimination or uninformed stere o t y p i n g ,e m p l oye r s’ attitudes tow a rds older work e r smust change if these barriers to employ-ment and training are to come dow n .Em p l oyers are gradually recognizing thatolder workers are motivated to acquire newskills, and there is evidence that more andm o re older workers are using new technolo-gies at work. Howe ve r, there is still muchroom for improvement if the Ma s s a c h u s e t t seconomy is to fully utilize its older work-f o rce. Im p roving the Commonwe a l t h’sw o rk f o rce development system will have lit-tle effect if employers fail to act affirmative-ly to re m ove any obstacles to the employ-ment of older work e r s .

Promoting WorkIncentives

Akey goal of the Commission’srecommendations is for theaCommonwealth’s workforce de-

velopment system to improve the skills,productivity, and incomes of older work-ers. Employers will also benefit from theavailability of a better-trained workforce,and the stronger work incentives fromhigher wages will contribute to the solven-cy of Medicare and Social Security bylengthening working lives.

Hand in hand with stronger work incen-tives is the need to address disincentives toworking. Primary among these are theearnings’ limitations and high marginal taxrates on the earned incomes of certainretirees under the Social Security system.Social Security benefits are currently nottaxed for persons between 62 and 65 whoearn less than $10,080 and for persons 65to 70 who earn less than $17,000.14

Social Security benefits for persons withincome in excess of these earnings thresh-olds are reduced at a 50% rate (that is, a $1reduction in benefits for eve ry $2 ofearned income) if they are between 62 and65 and at a 33% rate for those 65 to 70.

These high marginal tax rates on earningsa re both financial and psyc h o l o g i c a limpediments to older people who wish tocontinue to work. Their disincentiveeffects fall most heavily on persons 62 to

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14Social Security recipients over 70 are not subject to earnings’ limitations.

65, the group who might otherwise bemost likely to defer retirement.

The recent Wo rk In c e n t i ves Im p rove m e n tAct of 1999 re p resents one step tow a rd si m p roving work incentives by allow i n gpersons receiving disability benefits underSocial Security to return to work withoutlosing their health insurance benefits. Asecond improvement is the small re d u c t i o nin tax disincentives that is already sched-uled to occur under Social Se c u r i t y.Howe ve r, fully eliminating the earnings’limit would be a major step in re i n f o rc i n gthe work incentives of older workers, aswould making Me d i c a re coverage anoption for older persons who re m a i ne m p l oyed. These policy changes will haveto occur at the federal level, but theCommission urges all citizens of theC o m m o n wealth to support these re f o r m sby contacting their congressional delegates.

Making Massachusettsthe “WorkforceDevelopment State”

Massachusetts already has a well-deserved reputation for beingthe "education" state. How-

ever, education alone cannot assure eco-nomic prosperity. It must be joined with alarger and more effective investment inw o rk f o rce development than theCommonwealth has made in the past.

The Commission’s recommendations pro-vide action guidelines that each of themajor stakeholders in the economy –employers, unions, governments, educa-tion and training organizations, andinformed citizens – must take to ensurethat this investment is made. T h eCommission hopes that the facts and ideaspresented in this report will focus policydebate on how to reform and enrich theCommonwealth’s workforce developmentsystem so that the Commonwealth’s recordof economic growth will continue unabat-ed into the next decade.

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Quinn, J. F., "New Paths to Retirement," inBrett Hammond, et al. (Eds.), ForecastingRetirement Needs and Retirement Wealth,University of Pennsylvania Press,Philadelphia, forthcoming.

Sterns, H.L., and McDaniel, M.A., "JobPerformance and the Older Worker," in S.E.Rix (Ed.), Older Workers: How Do TheyMeasure Up? An Overview of Age Differencesin Employee Costs and Performance, AmericanAssociation of Retired Persons, Washington,DC, 1994.

Sum, A., Bahuguna, A., Fogg, N., Fogg, W.,Harrington, P., Palma, S., and Suozzo, W.,The Road Ahead: Emerging Threats to Workers,Families, and the Massachusetts Economy,Teresa and H. John Heinz Foundation andMassInc, Boston, 1998.

Sum, A. and Fogg, W.N., "Profile of theLabor Market for Older Workers," Chapter 3in P.B. Doeringer (Ed.), Bridges to Retirement:Older Workers in a Changing Labor Market,ILR Press, Cornell University, Ithaca, NY,1990, pp. 23-32.

Sum, A. and Fogg, W.N., "Labor MarketTurbulence and the Older Worker," in P.B.Doeringer (Ed.), Turbulence in the AmericanWorkplace, Oxford University Press, NewYork, 1991.

Sum, A., and Suozzo, P., "The Aging of theMassachusetts Workforce," MassachusettsBenchmarks, Vol. 2, Issue 1, Winter 99, pp.9-11 and 14-15.

Wagner, D.L., and Bonham, G.S., "FactorsInfluencing the Use of Older Workers: ASurvey of U.S. Employers," paper deliveredat Gerontological Society of America, AnnualScientific Conference, Philadelphia, PA,November 1998.

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Appendix I

RESEARCH REPORTS AND BRIEFS

Research Reports prepared by the Centerfor Labor Market Studies, NortheasternUniversity

1. Recent Trends in the Labor ForceBehavior and Employment Status ofOlder Persons 45-69) in Massachusettsand New England, March 1997.

2. Recent and Projected Trends in the OlderWorker Population of Massachusetts: ADemographic Assessment, September1997.

3. Trends in the Labor Force Behavior ofOlder Workers in Massachusetts,September 1997.

4. The Labor Force Behavior ofMassachusetts’ Older Worker Population:An Assessment of Recent Trends andFuture Projections, October 1997.

5. The Declining Labor Force Attachmentof Older Males in Massachusetts and theU.S.: Implications for Poverty/NearPoverty Problems, the Income TransferSystem, and Future WorkforceDevelopment Policy, December 1997.

6. The Income Inadequacy Problems of theOlder Worker Population inMassachusetts: An Assessment of RecentTrends and Their Implications for FutureWorkforce Development Policy,December 1997.

7. The Older Worker and the ChangingIndustrial and Occupational Structure ofEmployment in Massachusetts, January1998.

8. The Older Worker Population ofMassachusetts and Its Labor ForceBehavior and Labor Market Problems inthe 1990s, March 1998.

9. Estimating the Potential Universe ofNeed for Employment and TrainingServices Among Older Persons inMassachusetts, July 1998.

10. The Labor Force Behavior of theMassachusetts Older Worker Populationin the Current Labor Force Boom:Implications for Future WorkforceDevelopment Policy, August 1998.

11. The Real Incomes of Older Families inMassachusetts, 1979-1996: Trends intheir Levels and Distributions,September 1998.

12. The Older Worker Population’sParticipation in JTPA Training andEmployment Programs During FY97 inMassachusetts and the U.S.: AComparative Analysis, September 1998.

13. Trends in Earnings Levels and EarningsInequality Among Older Workers in theU.S. and Massachusetts, December1998.

Research Report prepared by theGerontology Institute, University ofMassachusetts Boston

14. Older Workers’ Perceptions of Training,Job Search, and Employment, January1999.

Research Briefs prepared by the Center forLabor Market Studies, NortheasternUniversity

1. Problems of Dislocation Among OlderWorkers (45+) in New England, March1997.

2. The Unutilized and Underutilized OlderWorker Population in New England andMassachusetts, March 1997.

3. Older Workers and the Growth of theNew England and Massachusetts LaborForce, March 1998.

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4. A Note on Labor Force Concepts andData Sources, 1998.

5. A Note on Data Sources and Definitions,1998.

6. A Summary of Recent and ProjectedTrends in the Older Worker Populationof Massachusetts, March 1998.

7. Updates of Older Worker Universe ofNeed Estimates by Gender, September1998.

8. Identification of Potential MismatchIndustries for the Report of the BlueRibbon Commission, December 1998.

9. Dislocation Rates and the Re-employ-ment Experiences of Dislocated OlderWorkers in New England, December1998.

10. The Older Worker Labor Force inMassachusetts: Past, Current andProjected Trends, December 1998.

11. The Aging of the Massachusetts WorkForce, Expanded MassachusettsBenchmarks Article, December 1998.

12. Replacement Wage Ratios for Re-employed Dislocated Workers inMassachusetts, PY 93 to PY 96,December 22, 1998.

13. Evaluating Future Employment andTraining Programs for Older Workers: AReview of the Potential Uses of the UIWage Records for Program Evaluation,December 1998.

14. Estimating the Number of OlderPersons (45-69) in Massachusetts withFamily Incomes Below Specific IncomeThresholds, January 1999.

15. Projected Labor Shortages and SkillMismatches in Massachusetts, 1995-2006, January 1999.

16. Trends in the Real Incomes of AllFamilies and Older Families inMassachusetts, 1979 to the Mid 1990s,January 1999.

17. Income Inadequacy Problems Amongthe Older Worker Population inMassachusetts, December 1998.

18. Another Look at the Multiple LaborMarket Problems of Older and YoungerWorkers in the State, January 1999.

19. Implications of the Findings on RisingIncome Inequality for Future Economicand Workforce Development Policy inMassachusetts, January 1999.

20. Employment and Training Services toOlder Workers Under the JTPA Systemin Massachusetts, January 1999.

21. Unemployment Problems of OlderWorkers in Massachusetts, January 1999.

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Appendix II

Meetings and Hearings

February 14, 1997

Lt. Governor Argeo Paul Cellucci invitesrepresentatives from business, labor, and theacademy to become members of the BlueRibbon Commission on Older Workers

June 3, 1997

First meeting of the Blue RibbonCommission on Older Workers at John F.Kennedy School of Government, HarvardUniversity

July 30, 1997

Employer Roundtable Meeting at OneAshburton Place, Boston

September 23, 1997

Blue Ribbon Commission on OlderWorkers meeting at Division of Employ-ment and Training

March 4, 1998

Blue Ribbon Commission on Older Wor-kers meeting at Division of Employmentand Training. Presentation on theCommonwealth’s Workforce DevelopmentSystem; speakers included JonathanRaymond, Deputy Director, WorkforceDevelopment, Department of Labor andWork Development; Erin Flynn, AssistantDirector, Jewish Vocational Services; RobertBickerton, Administrator, Adult andCommunity Learning Services, Departmentof Education; Janice Motta, ExecutiveDirector, Executive Office of Community

Colleges; William Jackson, State ProgramManager, Elder Service Corp, ExecutiveOffice of Elder Affairs; and Jim Ewen,Executive Director, Franklin County HomeCare Corporation

April 17, 1998

Blue Ribbon Commission on OlderWorkers meeting at Division of Employ-ment and Training

May 12, 1998

University of Massachusetts BostonGerontology Institute Focus Group witholder workers in Lawrence

May 20, 1998

Haverhill Older Worker Town Hall Meetingwith members from the Blue RibbonCommission on Older Workers

June 3, 1998

Blue Ribbon Commission on OlderWorkers meeting at Division ofEmployment and Training

June 23, 1998

University of Massachusetts BostonGerontology Institute Focus Group witholder workers in Greenfield

July 1, 1998

University of Massachusetts BostonGerontology Institute Focus Group witholder workers in Springfield

July 2, 1998

University of Massachusetts BostonGerontology Institute Focus Group witholder workers in Boston

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July 29, 1998

Blue Ribbon Commission on OlderWorkers meeting at Division ofEmployment and Training

August 11, 1998

University of Massachusetts GerontologyInstitute Focus Group with older workers inNew Bedford

September 3, 1998

Blue Ribbon Commission on OlderWorkers meeting at Division ofEmployment and Training

October 15, 1998

Blue Ribbon Commission on OlderWorkers meeting at Division ofEmployment and Training. Discussion onSection 30 of the Unemployment InsuranceLaw, which provides for extended unem-ployment insurance benefits for persons inapproved training programs, and the newMassachusetts Workforce Training Fund;Susan McKelliget, Chief of Staff PolicyDirector.

October 27, 1998

Blue Ribbon Commission on OlderWorkers meeting at Division ofEmployment and Training

November 10, 1998

Blue Ribbon Commission on OlderWorkers meeting at Division ofEmployment and Training

February 10, 1999

Blue Ribbon Commission on OlderWorkers meeting at Division ofEmployment and Training

July 29, 1999

Blue Ribbon Commission on OlderWorkers meeting at Division ofEmployment and Training

December 15, 1999

Blue Ribbon Commission on OlderWorkers meeting at Federal Reserve Bank,Boston

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Appendix III

Blue Ribbon CommissionRecommendations on theWorkforce Training Fund

The following recommendations of the BlueRibbon Commission for the regulations gov -erning the Workforce Training Fund weretransmitted to Edward J. Santella, Esq., theAssistant Chief Counsel for the MassachusettsDivision of Employment and Training, onNovember 10, 1998.

Dear Mr. Santella:

The Blue Ribbon Commission on OlderWorkers was appointed in 1997. Its man-date is to conduct a review of the currentstatus of older workers in the Common-wealth; to analyze employment, training,and other policies that affect such workers;and to make recommendations forimproving these policies.

One of our major findings is that thef u t u re prosperity of the Ma s s a c h u s e t t seconomy is highly dependent on theCommonwealth’s ability to fully utilizeworkers 45 and older. This means thatboth our employers and our public train-ing organizations must do a better job oftraining and developing the older laborforce than they have in the past.

The current boom in the Massachusettseconomy is threatened by a growing scarci-ty of labor. Our labor supply has grownonly 1% since 1990, a rate that places the

Commonwealth 47th in the nation andfar behind the other industrial states withwhich we compete. At the same time, ourworkforce is aging rapidly. Thirty percentof the labor force is now over 45 and thisfraction is projected to rise to 38% by theyear 2010. The combination of job growthin newer industries that have above aver-age concentrations of younger workers andthe dramatic aging of the workforce willproduce unprecedented labor market mis-matches early in the next century, unlessmajor new investments are made in work-force training and development.

Workers 45 and older represent the largestpool of underu t i l i zed workers in theC o m m o n wealth. Commission estimatesshow that there are almost 190,000 work-ers over age 45 who are unemployed,underemployed, or who have prematurelywithdrawn from the labor market. Thisgroup of workers constitutes an experi-enced labor reserve equivalent to over 6%of the Massachusetts labor force. If theskills of these older workers can be furtherdeveloped, they could help substantially tooffset the projected labor scarcities.

The new Workforce Training Fund canmake a particularly important contribu-tion to alleviating labor scarcities and mis-matches in the Commonwealth over thenext decade by ensuring that older workersare fully included in workforce develop-ment initiatives of employers, unions, andbusiness associations. Almost 30% ofunderutilized workers 45 and older arecurrently employed and, therefore, eligiblefor employment and training serv i c e sthrough the Fund’s programs. About one

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third of currently employed workers 45and older are also a likely target for Fundservices because they are at risk of layoff,and of the large earnings losses thatinevitably accompany the displacement ofolder workers.

Despite the importance of training andupgrading the older labor force, this grouphas often not received an appropriate shareof training resources. Recent governmentsurveys have found that private sectortraining neglects the older worker. Amonga national sample of employers, for exam-ple, only about half of workers 55 andolder received private sector training, com-pared to an average of 70% for all employ-ees. A similar pattern is found in pubicsector training in Massachusetts whereonly 3% of the older worker population inneed of training is served under theCommonwealth’s JTPA programs. A well-designed incumbent worker training pro-gram can simultaneously meet the trainingand development needs of older workers,provide employers with skilled and experi-enced labor, and alleviate the labor scarci-ties that are likely to constrain the futuregrowth of the Massachusetts economy.

In order to help accomplish the centrallegislative goals of the new WorkforceTraining Fund – increasing the skills oflow wage, low-skilled workers and creatingor preserving jobs at wages sufficient tosupport a family – the Commission urgesDET to incorporate the following recom-mendations into its program regulations:

Recommendation 1Appoint one or more persons who have anin-depth knowledge of older work e re m p l oyment issues to serve on theWorkforce Training Fund Advisory Panel.

The training and retention of older work-ers must be a high priority if theMassachusetts economy is to continue togrow. The Commission has found thatunderemployed older workers are eager fortraining, but tapping their skills and expe-rience often requires different approachesto human resources development fromthose that are suitable for younger work-ers. Having expertise in older workersemployment and training issues represent-ed on the Panel will provide an importantvoice for shaping training and technicalassistance efforts for employers with agingworkforces. This can best be accomplishedby amending the definition of theWorkforce Training Fund Advisory Panelin Section 14.03 of the draft regulations toinclude a member knowledgeable aboutolder worker employment issues.

Recommendation 2Priority should be given to the support ofprograms that include a strong representa-tion of workers 45 and older.

In a growing economy with almost noremaining labor re s e rves, underu t i l i ze dworkers over 45 must be a key element ofany public training strategy. Such workers,however, have traditionally been underrep-

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resented in private sector training effortsand have also been under-served by publictraining programs in the Commonwealth.Moreover, incumbent older workers areconcentrated in the kinds of mature indus-tries where continued employment is oftenat risk. Giving precedence to training andtechnical assistance in workplaces thatemploy a high proportion of older workerswill provide an incentive to targetingresources where the need is greatest andw h e re substantial benefits for theCommonwealth can be obtained. Thisrecommendation can be accomplished byadding to the criteria for approval of grantapplications in Section 14.07 of the draftregulations specific reference to the repre-sentation of workers 45 and older.

Recommendation 3Ensure that training and technical assis-tance resources are made available to smallemployers most in need of building theirtraining capacity by focusing on establish-ments with 50 or fewer employees.

The Workforce Training Fund legislationrecognizes that there is a special need tostrengthen the human resources develop-ment capacity of small businesses. Thisneed is greatest in establishments with 50or fewer employees. These establishmentsaccount for over 1 in 3 jobs in theCommonwealth, they are at a greater riskof downsizing and business closings thanlarger establishments, and they alsoe m p l oy a dispro p o rtionate number ofworkers over 45. This recommendation

can be accomplished by amending part (f )of the criteria for approval of grant appli-cations in Section 14.07 of the draft regu-lations to state that employers with 50 orfewer employees are the small businessesthat most lack a training capacity.

Recommendation 4Require that program applications provideinformation on the education levels andearnings of the employees to be trained,and on the extent of wage upgrading orjob retention that will be achieved by theprogram

Information on the education levels ofemployees will help to ensure that pro-gram resources are directed towards work-places that employ persons where the needfor and benefits from training are large.Information on the wages re c e i ved byemployees to be trained, wages for the jobclassifications for which training will beprovided, and on the prospects for theretention of trained workers will provideimportant indicators of the potential pay-off to program investments. This recom-mendation can be accomplished by addingto Section 14.06 of the draft regulationsthe explicit requirement that applicationsfor training grants include information onthe education levels and earnings of theemployees to be trained, and on the extentof wage upgrading or job retention thatwill be achieved by the program.

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Recommendation 5Require that employers conduct an assess-ment of the training and developmentneeds of their employees, as well as of thetraining needs of their firms, as part of theapplication for support under theWorkforce Training Fund.

The training needs of employers are oftenmore narrow than those of their employeesand may not emphasize longer-term devel-opment needs of workers. The WorkforceTraining Fund can provide import a n tincentives to employers for enhancing theskills, pro d u c t i v i t y, and flexibility ofincumbent workers beyond the level need-ed to meet short-term business needs.Including employee needs assessments aspart of the application process, and as partof on-going training efforts, can help toensure high quality workforce develop-ment. This recommendation can beaccomplished by (1) adding to Section14.06 of the draft regulations the explicitre q u i rement that the applications fortraining grants include assessments ofe m p l oyee training and deve l o p m e n tneeds, as well as of the training needs ofthe employer and (2) by amending Section14.07 of the draft regulations to includethe extent of employee and employer needas demonstrated by the needs assessmentas a criterion to be considered in approv-ing applications for training grants.

Recommendation 6Devise a MIS system incorporatingdetailed data on the age, race, gender, edu-

cation levels, and earnings of trainees thatwill allow the Commonwealth to accurate-ly monitor the economic progress of bothindividuals and employers served underincumbent worker training pro g r a m s .Require that all programs supported bythe Workplace Training Fund contain pro-vision for an independent long-term eval-uation of program performance.

The Commission has found that there isan unfortunate lack of information onwhat JTPA training programs for olderw o rkers in the Commonwealth haveaccomplished. This information gapranges from inadequate data on currentprogram performance to the absence ofmeasures of the long-term consequences oftraining. Without such information, it isdifficult to determine what types of pro-grams work best or to derive insights fromcurrent program experience that could beused to improve future programs. It isimportant to ensure at the outset of newWorkforce Training Fund programs thatthis problem is eliminated by providing inadvance for adequate management infor-mation systems and long-term evaluationsof program performance. This recom-mendation will mean adding to Section14.06 of the draft regulations the explicitre q u i rement that the applications fortraining grants include provisions for sup-plying DET with the information neededto support this MIS system in a timelymanner and for cooperating with an inde-pendent long-term evaluation of the pro-gram. An additional regulation will alsobe required stating that detailed monitor-

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ing and independent long term programevaluations are required to give effect tothe statutory obligation under Se c t i o n2RR (d) that the Commissioner shall filean annual report on training grants withthe Joint Committee on Commerce andLabor and the House and Se n a t eCommittees on Ways and Means.

Recommendation 7Take affirmative steps to encourage publicsector and not-for-profit employers toapply for support under the WorkforceTraining Fund.

Analyses prepared for the Commissions h ow that many older workers areemployed in the public and not-for-profitsectors and that labor market mismatchesare likely to affect a significant fraction ofemployers in these sectors in the future.Public sector employers and many smallernot-for-profits often have limited trainingcapacity to deal with these mismatchesand have been neglected as employersunder JTPA programs. As with smallestablishments, the Commission urgesthat technical assistance and training sup-port be used to build the training andworkforce development capacities of suche m p l oyers. This recommendation willrequire the amendment of Section 14.05(1) of the draft regulations to expresslyinclude public sector and not-for-profitemployers.

Recommendation 8Take affirmative steps to ensure that com-munity-based organizations, communitycolleges, and business associations areaware that they are eligible to providetraining and technical assistance servicesunder the Workforce Training Funds.

Such organizations often have specialtraining competencies in designing pro-grams for older workers and other groupswith special employment needs that maynot be available to employers, and unionsthrough more traditional education andtraining institutions. It is important thatDET provide information to these organi-zations to facilitate tapping such strengths.This recommendation will re q u i re theamendment of Sections 14.05 (2) and14.08 (1) of the draft regulations toexpressly include community-based orga-nizations, community colleges, and busi-ness associations as providers of technicalassistance.

Respectfully submitted for the BlueRibbon Commission on Older Workers,

John T. Dunlop, Chair

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