Worker Profiling and Reemployment Services

1
Worker Profiling and Reemployment Services

• Making the Connection New Strategies for
  Reemploying Unemployment Insurance Claimants in
  the New Global Economy
• June 2007
• Michael Hartnett
• Education, Workforce, and Income Security Issues
  U.S. Government Accountability Office

2
Introduction

• Over the past five decades, the average duration
  of unemployment has been gradually increasing, so
  that during 2006, periods of unemployment grew to
  an average of 15 weeks, compared with 11 weeks
  during the 1950s.
• In 2006 about 7 million claimants received UI
  payments, totaling about 30 billion. Of those
  claimants, about 35 percent used all the benefits
  available to them. If they had used 1 week less
  of benefits, it would have saved the state UI
  trust funds about 600 million.
• Worker Profiling and Reemployment Services,
  established by Congress in 1993, requires state
  UI agencies to identify those who are most likely
  to exhaust their benefits and refer them to
  reemployment services.

3
Research Objectives

• How do states identify unemployment claimants who
  are most likely to exhaust benefits?
• To what extent do states provide reemployment
  services as recommended by Labor?
• What is known about the effectiveness of the
  worker-profiling initiative in accelerating the
  reemployment of unemployment insurance claimants?

4
Scope and Methodology

• To address our research objectives, we
• interviewed Labor officials and subject matter
  experts
• analyzed Labor data collected from the 53 states
  and territories via a 2006 survey on profiling
  models program data
• analyzed data on profiling, reemployment
  services, and outcomes reported by states to
  Labor
• interviewed states officials in 7 states
  (California, Delaware, Illinois, Kentucky, Texas,
  Washington, Wisconsin) and visited local service
  providers in 4 of these and
• identified five sufficiently rigorous studies on
  the impact of the program.

5
Summary of Results

• Most states use statistical models to identify
  claimants most likely to exhaust their benefits,
  but many have not recently adjusted these models
  to ensure their accuracy.
• Though it is difficult to determine the extent to
  which all states are providing reemployment
  services because some of Labors data are
  unreliable, we found that six of the seven states
  we studied did not provide the in-depth services
  originally recommended by Labor.
• Little is known about the current effectiveness
  of the program because the impact studies that
  exist are old and only some of Labors data were
  reliable and are not consistently used to
  evaluate the initiative.

6
Worker-Profiling
BACKGROUND

• The worker-profiling program required that states
  establish a system of profiling UI claimants to
  identify those likely to exhaust benefits and
  refer them to services.
• Labor recommended that states provide
• an orientation session for claimants to outline
  the availability and benefit of services
• an assessment of the specific needs of each
  claimant, if appropriate and
• an individual plan to guide a claimant's further
  services.
• The law holds that states must require claimants
  who have been referred to services participate in
  the services as a condition of receiving
  compensation.

7
Worker-Profiling Process
BACKGROUND
Source Unemployment Insurance Program Letter
41-94 Unemployment Insurance Program
Requirements for the Worker Profiling and
Reemployment Services Program, Employment and
Training Administration, Department of Labor,
August 16, 1994.
8
Reporting Requirements
BACKGROUND

• Data collected by Labor
• Labor directed states to collect and report
  information on a quarterly basis the type of
  services claimants receive, their participation,
  and their subsequent employment outcomes.
• Program effectiveness
• In compliance with the authorizing legislation
  requiring that Labor report to Congress on the
  operation and effectiveness of the profiling
  system within three years, Labor issued a report
  in March 1997 and published a final report in
  1999 on operations nationwide and effectiveness
  in 6 states.
• Labor has published no studies on effectiveness
  since then.

9
Funding
BACKGROUND

• Profiling Models can be funded by
• UI administrative funds
• Reemployment Services can be funded by
• Wagner-Peyser Employment Services grants
• State sources of funding, such as special surtax
  tax on UI taxes
• Reemployment Services grants1 provided to all
  states from 2001 to 2005 to enhance and target
  services to claimants through one-stop centers

1 Reemployment services grants could be used to
fund services and are different from the
Reemployment Eligibility and Assessment (REA)
grants, which cannot be used to fund services,
according to Labor officials.
10
Most States Use Statistical Models, but Many Have
Not Updated Them
OBJECTIVE 1 Profiling Models

• Overview
• Most states use statistical models to identify
  claimants who are most likely to exhaust their
  unemployment benefits.
• The size and complexity of the statistical models
  vary considerably.
• Many states do not regularly update their models
  to ensure predictive accuracy.
• Officials from our study states said that they
  face certain obstacles to regularly updating the
  models, including technical and data difficulties
  and other priorities for limited funds.

11
Most States Use Statistical Models instead of
More Limited Characteristic Screens
OBJECTIVE 1 Profiling Models

• Of the 53 states and territories
• 45 use statistical models
• 7 use characteristic screens
• Florida delegates the selection of tools to the
  local areas
• Labor encourages the use of statistical models
  over characteristic screens because they are more
  efficient and precise in identifying claimants
  likely to exhaust. Further, they allow states to
  rank the claimants in order of likelihood.
• Labor required the use of certain factors in
  determining likelihood of exhaustion and
  recommended others.

12
Labor Recommended Factors
OBJECTIVE 1 Profiling Models
Source U.S. Department of Labor, Employment and
Training Administration, Unemployment Insurance
Program Letter 41-94, August 1994. a Labor
requires that state profiling models consider
either a claimants industry or occupation. The
other factors are recommended but optional.
13
Statistical Models Vary in Key Elements
OBJECTIVE 1 Profiling Models

• Prediction of exhaustion
• Most states predict probability of exhaustion as
  either exhaust or not others predict the amount
  of benefits a claimant will potentially use.
• Definitions of similar variables
• Example California uses 6 categories to measure
  job tenure (ranging from 1 year or less to more
  than 15 years), while Texas uses only 2 (job
  tenure of less than 1 year and job tenure of more
  than 10 years).
• Number and nature of variables
• Most states (34 of 45) use models that consider
  factors in addition to the five factors
  recommended by Labor.
• Example California uses 1 additional variable,
  while Kentucky uses over 50.

14
Many States Have Not Updated Their Models since
2000 or Before
OBJECTIVE 1 Profiling Models

• Labor has taken a number of actions to encourage
  and assist states in updating their models
  periodically to reflect changes in economic
  condition, but the agency
• has not established requirements for updating
  models and
• has not undertaken ongoing monitoring of state
  models.
• 18 states have not adjusted variable weights
  since 1999 or prior, including 12 states that
  have never adjusted them
• 30 states have not changed or redefined variables
  in their models since implementation

15
Many States Have Not updated Their Models since
2000 or Before
OBJECTIVE 1 Profiling Models
States Adjustments of Model Coefficients
Note The number of states and territories does
not total 53 because 7 states did not respond to
this query.
16
Variety of Reasons States have Not Updated Their
Models
OBJECTIVE 1 Profiling Models

• According to officials from our study states,
  they have not updated their models for a variety
  of reasons, including
• more pressing priorities exist for UI
  administrative funds,
• revising the models required expertise that the
  state did not have,
• more continuous access to technical expertise is
  needed to keep models updated, and
• historical or other necessary data needed to
  determine impact on exhaustion are not available.

17
Most Study States Did Not Take the In-Depth
Approach to Services Labor Recommended
OBJECTIVE 2 Reemployment Services

• Overview
• Labor data provide a limited picture of states
  implementation of worker-profiling
• Most study states did not offer the in-depth
  approach to services recommended by Labor
• 6 of our 7 study states referred claimants to
  services and enforced their participation in
  these services
• 6 of our 7 study states provided limited
  reemployment services and did not provide
  individual assessments and individual service
  plans

18
Data Collected by Labor Provided a Limited
Picture of States Implementation of Services
OBJECTIVE 2 Reemployment Services

• Between 2002 and 2006, about 94 of all UI
  claimants who received a first payment were
  profiled
• Of those profiled
• An average of 15 were referred to services
• Ranged from 1 (Wyoming) to 52 (Washington)
• An average of 11 completed services
• Ranged from 1 (Arkansas, Colorado, Idaho,
  Michigan, and Wyoming) to 39 (Texas)

19
Percentage of Claimants Referred to Services, of
Those Profiled
OBJECTIVE 2 Reemployment Services
20
Percentage of Claimants Completing Services, of
Those Profiled
OBJECTIVE 2 Reemployment Services
21
Data Collected by Labor Provided a Limited
Picture of States Implementation of Services
OBJECTIVE 2 Reemployment Services

• Labors data are not sufficiently reliable to
  provide any information on the specific services
  provided to claimants, such as orientation,
  counseling, job search workshops, or job clubs.
• Labor and state officials told us that
  definitions of these services can vary across
  states and within states over time as they change
  the content of their programs.
• For example, California officials told us that
  the states definition of services were
  established over 10 years ago and may have since
  changed.

22
6 of 7 States We Studied Referred Claimants and
Enforced Compliance with Referrals
OBJECTIVE 2 Reemployment Services

• Officials in one state delegated referral to
  local areas and did not know whether claimants
  were being referred.
• They further said that there are no consequences
  for those who fail to attend reemployment
  services.
• Several local service providers we contacted in
  that state said that they had not been referring
  claimants for years.
• Some states took additional steps to ensure
  compliance.
• For example, Delaware and Washington required
  that claimants reschedule if they failed to
  attend required services, while Texas and
  Wisconsin attempted to reschedule claimants in
  some cases.
• Officials cited the large flow of claimants into
  the program, the complexity of the rescheduling
  process, and the scarcity of staff resources as
  reason they did not reschedule claimants.

23
6 of 7 States We studied Provided Limited
Reemployment Services
OBJECTIVE 2 Reemployment Services

• Only one of our study states, Delaware, required
  an individual assessment and individual service
  plan as recommended by Labor.
• Washington and Wisconsin required that claimants
  complete a self-assessment, while 4 states
  required no assessment.
• For example, claimants at one one-stop center
  were expected to complete a one-page
  self-assessment with questions such as what
  educational level they attained and whether they
  had a current resume.
• California and Wisconsin required that claimants
  develop their own reemployment plans.
• For example, California required that claimants
  at orientation choose an additional service, such
  as a job club, that would constitute their
  individual reemployment plan.

24
States Cited Challenges to Providing Reemployment
Services
OBJECTIVE 2 Reemployment Services

• Officials in all 7 states cited lack of or
  declining funding as impacting services,
  including the loss of Reemployment Services
  grants and continuing declines in Wagner-Peyser
  funding.
• To help address this issue, officials in
  Washington told us that a special state surtax is
  applied to UI taxes and a small portion of this
  is diverted to worker-profiling service
  activities.
• Labor officials said that the purpose of the
  program is to target the funding that does exist
  to claimants who need it most and that the
  program does not mandate that states serve more
  claimants than prior to its implementation.
• Officials also cited other day-to-day challenges,
  including serving a variety of claimants, from
  upper management employees to construction and
  factory production workers, and claimants
  language skills.

25
Little is Known about Programs Effectiveness
OBJECTIVE 3 Impact Outcomes

• Overview
• Research studies using data from the programs
  early implementation (1994-1996) indicate
  generally positive results
• Labor data collected from the states on the
  outcomes of claimants profiled and referred are
  of limited value as
• Portions of the data are unreliable
• Neither Labor nor states use the data to evaluate
  program effectiveness

26
Early Research Indicated Some Positive Outcomes,
But No Current Studies Exist
OBJECTIVE 3 Impact Outcomes

• 5 studies on impacts of the program found that
  referral led to
• Reduction in claimants duration on UI
• Reduction in the amount of UI benefits paid out
• Increased employment earnings
• However, they had mixed results for whether the
  program
• Reduced the percent of claimants who exhausted
  their benefits
• Improved subsequent employment rates

27
Research Studies Included in Our Literature Review
OBJECTIVE 2 Impact Outcomes
Source GAO analysis of relevant studies. a Dates
indicate when claimants filed their UI claim or
received their first UI benefit payment. b
Unpublished dissertation. c Delaware was
included in this study, but its sample size was
too small to detect any significant impacts.
28
Studies are Limited and No Current Studies Exist
OBJECTIVE 3 Impact Outcomes

• Limitations of studies
• Cover only 7 states no national study exists
• Used data from 1994-1996
• Labor has no current plans to study the effects
  of profiling
• Profiling process and reemployment services
  provided may have changed since studies were
  conducted

29
Summary of Research Study Findings on the Effect
of Referral to Services on Outcomes
OBJECTIVE 2 Impact Outcomes
Source GAO analysis of relevant studies. a
Claimant earnings subsequent to the UI claim may
be underreported because not all employers are
covered by the UI system, and claimant earnings
are not tracked if the claimant moves to another
state.
30
State Officials Perspectives on Usefulness of
Program
OBJECTIVE 3 Impact Outcomes

• Officials from our study states said that
  worker-profiling was a useful program for UI
  claimants as it enabled states to
• Advertise their job search and training services
  and target claimants most likely to exhaust their
  UI benefits
• Educate the community on the services and
  resources available at the one-stop service
  centers
• Focus resources on those who would benefit from
  job search assistance the most

31
Outcomes Data Collected by Labor
OBJECTIVE 3 Impact Outcomes
Source GAO analysis of U.S. Department of Labor
data. Note Data on claimant outcomes are for the
four quarters after the referral to services or
for the benefit year.
32
Labor Data Percentage of referred claimants who
exhausted UI benefits, 2002 to 2005
OBJECTIVE 3 Impact Outcomes
Source GAO analysis of U.S. Department of Labor
data.
33
Labor Data Percentage of referred claimants who
became employed, 2002 to 2005
OBJECTIVE 3 Impact Outcomes
Source GAO analysis of U.S. Department of Labor
data.
34
Labor Data Length of time referred claimants
received UI benefits, 2002 to 2005
OBJECTIVE 3 Impact Outcomes
Source GAO analysis of U.S. Department of Labor
data.
35
Outcomes Data Collected by Labor are Limited
OBJECTIVE 3 Impact Outcomes

• Due to reliability issues, Labor's claimant
  outcome data are of limited value.
• Other issues limited usefulness of the data,
  including
• Lack of a comparison group
• Long time lags data not reported for more than
  a year after claimants were referred to services
• Aggregation of data aggregated to the state
  level and some officials said that local level
  data would better meet their needs

36
Outcomes Data Collected by Labor are Not
Consistently Used for Evaluation Purposes
OBJECTIVE 3 Impact Outcomes

• 4 of 7 study states indicated they did not
  utilize the reemployment services data or
  claimant outcomes data.
• The remaining states said they used it for
  non-evaluative purposes, such as determining how
  many services were provided to claimants.
• Several state officials said they developed their
  own program performance measures and reports
  instead of using the reemployment services and
  claimant outcomes data.
• For example, Washington developed its own data
  warehouse system that links data on UI benefits,
  reemployment services, and claimant wages and
  staff examine performance indicators on a
  monthly basis as part of their management
  accountability review.

37
Conclusions

• The worker-profiling program is not a high
  priority at the federal level or in many states.
  If there is to be a continued federal mandate, a
  more assertive federal role may be necessary to
  ensure the integrity of the profiling models.
• Labors original vision of reemployment services
  may no longer be realistic or necessary.
  Expectations of states will remain unclear absent
  clarification from Labor.
• Labor is potentially wasting both its own and the
  states resources by requiring the submittal of
  data that are of limited reliability and value.
  Absent information about the programs current
  impact, decisions regarding the best means for
  returning UI claimants to work more quickly may
  be more difficult.

38
Recommendations

• We recommend that the Secretary of Labor
• Reevaluate Labors data collection to determine
  whether it is sufficient for its intended
  purpose.
• Ensure the agency takes a more active role to
  ensure the accuracy of the state profiling
  models.
• Encourage states to adhere to Labors vision for
  in-depth reemployment services or issue updated
  guidance if this would be too burdensome for
  states.
• Evaluate the impact of the program on the
  reemployment of UI recipients to ensure the
  benefits are commensurate with the resources
  invested.