IZA DP No. 3776: Workforce Development as an Antipoverty Strategy: What Do We Know? What Should We Do?
In this paper I note the basic paradox of workforce development policy: that, in an era in which skills are more important than ever as determinants of labor market earnings, we spend fewer and fewer public (federal) dollars on workforce development over time. I present trends in funding and how the major federal programs at the Department of Labor and other agencies have evolved over time, noting the dramatic declines in funding (with the exception of Pell grants). I then review what we know about the cost-effectiveness of programs for adults and youth from the evaluation literature. I consider some other possible reasons for funding declines, such as the notion that other approaches (like supplementing the low earnings of workers with tax credits or early childhood programs) are more effective and address more serious problems. I review some newer developments in workforce policy, mostly at the state and local levels, and then conclude with some policy recommendations.