Rethinking Workforce Development: Nevada's Urgent Call for Systemic Reform

Tech Impact's CEO, Patrick Callihan, drafted the following response to a recent article published in Nevada Current that highlights some of the issues within the workforce development system in Nevada.

A recent article by Dana Gentry published in Nevada Current highlights some of the issues within the workforce development system in Nevada. Although Nevada is not alone, the report's numbers are alarming and provide more than enough opportunities for systemic change.

“Delays, fraud, and system failures have become commonplace.” Noted Governor Lombardo in his State of the State speech last year, as Gentry’s article states. As the leader of a workforce development training provider in the state, I agree with Lombardo’s statement.  

The system is broken. It needs reform.

$44,769 per person to provide services to a dislocated worker is preposterous, particularly when $886 of those dollars make their way to a training provider. I have often suspected that for every $1 in taxpayer money meant for workforce development, only pennies on the dollar make their way to a training provider, arguably the most important part of the ecosystem. Gentry’s article confirmed my suspicions.

If $4,370 is the average quarterly earnings of a youth after receiving services, we would be better off sending a check to the youth and saving the taxpayers money. Of course, that is not the answer.  

The Office of Workforce Innovation in Nevada recently piloted a pay-for-performance program. This is the most responsible use of workforce funding I have seen in my career. The program is meant to pay training providers for results. It is not perfect, but it solves the issue that John Pallasch, former assistant secretary of employment and training at the Department of Labor, quoted, “The workforce development community likes to talk about the number of people served.” He is right, we should be talking about the number of people put into jobs and the average starting wages for those program participants.

Workforce development training providers should be judged on a few metrics- the cost per program, the success rate (people placed into employment), and the wages for those who have obtained jobs. From there, we can begin calculating the return on investment in our federal tax dollars meant for putting people to work.  

Job training is not cheap but can be effective. At Tech Impact, a leader in workforce training in Nevada, our programs we offer our students, youth between 18-26 who are out of school, unemployed, or underemployed, can cost an average of $12,500. But coupled with a success rate of placing an average of 70% (85% last fiscal year) of the participants into jobs that average over $20 per hour, the return on investment is much higher than any of the numbers cited in the Nevada Current article.  

The trouble is that it has been difficult for us to access any of the dollars meant for this training. Instead, we raise money from local businesses and foundations. And, in Nevada, we must subsidize the costs with dollars we raise in other states to offset the cost of the programs. It is worth it, seeing someone graduate from our program and start their career with a sustainable wage is why we do what we do. There is no better feeling than giving someone a hand up.

We stand behind our programs, so I favor Pay for Success programs, which only pay training providers that meet the desired employment outcomes. This is not the only way to ensure responsible spending in workforce development, but it is a good place to start thinking about system reform.

We have some work to do in Nevada, but the solutions are obtainable.

Patrick Callihan, CEO of Tech Impact