Return on Investment in Workforce Development Programs

Under more and more fiscal scrutiny because of shrinking state and local budgets, workforce development programs are being asked to estimate their return on investment (ROI). This paper introduced basic concepts of ROI in workforce development programs. It distinguished ROIs estimated for workforce programs from those that are estimated for financial investments or capital projects. The paper furthermore exposited the basic ingredients of an ROI study—identification of the treatment and time periods of analysis, identification of the net impacts of the program, and identification of net costs. Finally, the paper presented results from the estimation of the ROI for postsecondary career and technical education in the State of Washington” (p.i). (Abstractor: Author)

Calculating ROIs for workforce development programs requires considerable data and careful analyses of benefits and costs. We believe that it is folly to think that a simple, one-size-fits-all tool can be developed that can estimate a program’s ROI with minimal data inputs and with quick turnaround. Even though the data and analytical burdens are great, we believe that analyses of ROIs (or, equivalently, of benefits and costs) are a tool that administrators should use to monitor their program’s performance…The bottom line is that conducting a benefit-cost analysis has benefits and costs itself. The benefits include learning about what aspects of one’s program seem to have the greatest returns to customers and having evidence for program funders, such as legislators, about the positive impact of a program. The costs include the resources necessary to conduct the analyses. There also must be a recognition that, in workforce development, it is often the case that many benefits received by clients are intangible and not easily monetized and that activities that are instrumental in effective programming, such as analyzing labor market information, may not lead directly to benefits. We would advise program administrators to weigh these costs and benefits carefully before investing” (p.16-17). (Abstractor: Author)

• Last Updated:
• Created:
• Resource Publication Date: 2012
• Author(s): Hollenbeck, Kevin
• Organizational Author(s): W.E. Upjohn Institute for Employment Research
• Funding Source: National Association of Workforce Boards
• Resource Availability: Publicly available
• Posted by: Gary Gonzalez
• Posted in: Workforce System Strategies