Sectoral Employment Programs as a Path to Quality Jobs: Lessons from Randomized Evaluations
Wage inequality in the United States has skyrocketed in recent decades, with the highest earners increasingly pulling away from middle and low-wage workers. From 1979 to 2018, the top 0.1 percent has seen its earnings grow fifteen times faster than the bottom ninety percent, which has only seen consistent wage growth in ten of the past forty years. It is increasingly difficult for non-college-educated workers to gain employment in high-paying occupations with opportunities for career advancement, which has helped to drive the expansion in US educational wage differences and overall wage inequality. This rising inequality comes alongside significant and persistent racial gaps in earnings between workers. From 2000 to 2019, the wages of Black workers were 75.6 percent of white workers’ wages. These disparities often stem from structural barriers to opportunities faced by people of color in the American job market.
Sectoral employment programs—programs that train job seekers for high-quality employment, or employment in specific industries considered to have strong labor demand and opportunities for career growth—offer a promising pathway to higher-wage jobs for workers who may face barriers to employment, typically those without college degrees. But how can we be sure that these programs are truly effective? And through what mechanisms do they make an impact?
J-PAL North America’s Sectoral Employment Evidence Review summarizes an academic paper that examines four randomized evaluations of sectoral employment programs and describes the mechanisms behind their success. This analysis finds that sectoral employment programs generate impressive positive impacts on worker employment and earnings, with the effects largely driven by workers gaining access to higher-wage and higher-quality jobs. The magnitude and consistency of the findings point to sectoral employment programs as a promising tool to advance worker prosperity.
The Evidence Review aims to serve as a resource as policymakers, practitioners, researchers, and philanthropy work to reduce barriers to high-opportunity employment, improve earnings for workers, and minimize the growth of wage inequality. Key findings include:
- Sectoral employment programs generate substantial earnings increases in the year following training completion. These earnings persist in the evaluations with longer-term follow-up evidence.
- Sectoral employment programs substantially increase training and career services received and educational credentials and certificates attained, particularly those related to targeted sectors.
- Earnings gains from high-performing sectoral employment programs are among the largest found in evaluations of US training and employment services programs.
- Earnings gains from access to sectoral employment programs are driven by increasing the share of participants working in higher-wage jobs rather than increased employment rates or increased hours worked. This is likely from participants gaining employment in the targeted sectors.
- The most effective sectoral employment training programs include a combination of:
- Upfront screening for applicants on basic skills and motivation
- Occupational skills training targeted to high-wage sectors and leading to an industry-recognized certificate
- Career readiness training (also sometimes referred to as soft skills)
- Wraparound support services for participants
- Strong connections to employers