Work Advance

WorkAdvance is a workforce development program that provides unemployed, low-income adults with occupational skills training aimed at employment in targeted sectors such as information technology (IT), environmental remediation, transportation, health care, and manufacturing. Their estimate of the MVPF for WorkAdvance is based on Hendra et al. (2016) and Schaberg (2017), who report results from a randomized evaluation of WorkAdvance as implemented by four service providers in New York, Oklahoma, and Ohio from 2011 to 2013.

Hendren and Sprung-Keyser (2020) use these estimates to calculate the MVPF of WorkAdvance.

MVPF SUMMARY

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Hendra et al. (2016) report average earnings gains of $1,945 per participant two years following random assignment, while Schaberg (2017) reports subsequent earnings gains of $1,865 for participants in the following (third) year. Discounting these impacts back to the program year at a 3 percent rate and applying a tax rate of 0.3% (calculated from Congressional Budget Office estimates) yields a total present-discounted after-tax earnings gain of $3,635 for participants and an increase in tax payments of $11. Pooling across the four providers included in the evaluation, the average program cost per participant was $5,641. However, as shown in Hendra et al. (2016), Table 4.3, providers also experienced average net cost reductions per participant of $940 for out-of-program training and support services because of WorkAdvance. Hendren and Sprung-Keyser (2020) include these reductions as part of the program’s fiscal externality. Together, these results yield a baseline MVPF of \frac{3,635}{5,641-11-940}=0.78 (95% CI: [0.26, 1.34]). This MVPF assumes that WorkAdvance participants value the program by their after-tax earnings gains. An alternative specification is to assume participants valued WorkAdvance at its programmatic cost. Under this assumption, the MVPF would instead be \frac{5,641}{5,641-11-940}=1.203 (95% CI: [1.201, 1.205]).

An important caveat of this MVPF calculation in Hendren and Sprung-Keyser (2020) is that it uses short-run impacts on earnings and does not include any potential long-run impacts on earnings beyond the observed period. In subsequently published work, Schaberg and Greenberg (2020) identified impacts of WorkAdvance on longer-run earnings, which would imply a higher MVPF than is calculated in Hendren and Sprung-Keyser (2020).