Employer Incentives to Participate in a Comprehensive School-to-Work Transition Program

Abstract

This report evaluated economic incentives for employer participation in a comprehensive school-to-work (STW) initiative. In general, the business, economic, and educational literature emphasizes quantifying the fiscal benefits of employer-sponsored training, although only qualitative outcomes are available for some programs. The literature provides little insight, however, since analysis is hampered by the absence of a coherent empirical literature and the inconsistent quality of research. Some evidence shows that STW programs may provide employers with some economic benefits, such as positive public relations and name recognition, reduced costs of identifying and screening high productivity workers, and increased profits from hiring skilled workers. Program startup and maintenance can be expensive, however, and firms may incur significant costs from program participation. Because employer-sponsored training has been used for centuries in many European countries to prepare youth for labor market entry, analysis of successful international models suggests a number of market-based strategies that may be adapted for use in the U.S. marketplace. Incentives include the following: (1) structuring programs to provide incentives for employers to train; (2) creating a national infrastructure to support planning and oversight of training partnerships; (3) adopting reduced student training wages in conjunction with skill certification; and (4) offering direct wage or indirect tax subsidies to employers. (KC)