Measuring the Impacts of Career Training on the Economy

Abstract

The Housing and Redevelopment Authority of Duluth, Minnesota (HRA) and True North Goodwill both have several career-training programs designed to bring individuals into the labor market and build career pathways for in-demand jobs. The two organizations asked the UMD Labovitz School of Business and Economics’ research bureau, the Bureau of Business and Economic Research (BBER), to estimate the economic value of career advancement in the context of moving individuals and families from public assistance to a career.

Many career training programs are designed to serve low-income individuals—the same individuals most likely to receive public assistance. Research has found that adults and children who live in low-income households are more likely to face difficult circumstances like homelessness, unsafe neighborhoods, food insecurity, and inadequate health care. The authors added that these unfavorable circumstances have detrimental effects on children, including low academic performance and mental health issues.

Job training can provide numerous benefits for the participants. A study by Katz and colleagues (2022) found that sector-focused training programs generated substantial earnings gains (12%-34%) for participants. But research has also found that benefits extend beyond the individuals. A 2020 study conducted by Gasper et al. examined seven types of training programs in New York City. According to the study’s authors, investing one dollar in industry-focused career training yielded “between $2.80 and $17.78 after five years compared to if that dollar had been invested in a standard job screening and matching program.”

This study estimated the financial benefits of two career scenarios—Scenario 1, which represented a full-time career as a construction laborer, and Scenario 2, which represented a full-time career as a registered nurse—using data from the Career Ladder Identifier and Financial Forecaster (CLIFF) portal's Snapshot and Dashboard tools.

Data was collected and analyzed to compare the two career scenarios and a baseline scenario (a part-time cashier job). The study analyzed the earnings and public assistance benefits for a single adult living in St. Louis County, Minnesota, for 35 years, during which the adult's age ranged from 30 to 64 and who had an infant (age 0).

Over the course of their lifetime, the person working as a part-time cashier will earn roughly $460,000 in after-tax income, defined as earnings minus taxes paid. By comparison, the person working as a construction laborer or a registered nurse will earn roughly $1.5 million and $1.9 million, respectively. Additionally, the person working as a part-time cashier could receive roughly $733,700 in public assistance benefits over the 35-year period, whereas the person working as a construction laborer or registered nurse could receive $127,300 and $132,500, respectively.

For both career scenarios (construction laborer and registered nurse), state and federal government programs could save more than $600,000 in public assistance benefits over the course of the person’s working lifetime, as compared to working as a part-time cashier. The largest public assistance savings would come from the Medicaid program ($217,000 in savings), followed by Section 8/housing assistance ($182,500), SNAP ($141,200), and childcare assistance ($36,900). Lifetime savings from the Minnesota Family Investment Program (MFIP) would equal roughly $28,700.

The financial benefits estimated in this analysis were also used to model the economic impacts of Scenarios 1 and 2 on the state’s economy overall. The results of modeling found that the economic impacts to the state resulting from the career advancement of just one individual with our parameters exceed the financial benefits to the individual. For example, the person choosing a career as a registered nurse would see a cumulative increase in their net financial resources of $889,400. Yet, the state would see economic impacts of more than $1.1 million because of increasing the person’s household income.