Workforce Intermediaries: Generating Benefits for ... · play a critical role in aligning the needs...

Workforce

Intermediaries:

Generating

Benefits for

Employers and

WorkersA Report on Research Conductedby the Partnership for Employer-EmployeeResponsive Systems (PEERS)

Funded by the Ford Foundation

November 2003

About the Partnership for Employer-Employee Responsive Systems

The Partnership for Employer-Employee Responsive Systems (PEERS), fundedby the Ford Foundation, promotes dialogue and joint research among granteesof the foundation’s Private Sector Training Related Investments in Low-WageWorkers Initiative. Current and past PEERS member organizations include:

AFL-CIO Working for America Institute

American Society for Training and Development (ASTD)*

Aspen Institute

Initiative for a Competitive Inner City (ICIC)*

Jobs for the Future

Manpower, Inc.

Michigan Manufacturing Technology Center

National Association of Manufacturers Center for Workforce Success

U.S. Chamber of Commerce Center for Workforce Preparation.

Welfare to Work Partnership*

* Past PEERS member

Contents

Overview: The Evolution of the PEERS Research Question . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Foreword: Workforce: The Emerging Crisis in America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

I. The Structural Transformation of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

The Emergence of Workforce Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Developing the PEERS Research Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

II. The PEERS Typology of Workforce Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Designing the PEERS Typology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Using the PEERS Typology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Developing the PEERS Hypotheses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

III. PEERS Employer Survey Design, Data Collection and Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Employing the Phase I Test Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Executing the Phase II Test Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Analyzing the Effects of Using Workforce Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

IV. PEERS Research Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Conclusion: Implications for Future Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Appendices

Appendix A. Typology Design Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Appendix B. PEERS Survey Instrument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Tables

Table I. The PEERS Typology of Workforce Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Table II. Summary of PEERS Typology Derived Hypotheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Table III. Employer Satisfaction with Workforce Intermediaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Table IV. Functional Uses of Workforce Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Table V. Workforce Intermediary Function Categories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Table VI. PEERS Findings on the Effect of Workforce Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

In 2001, the Ford Foundation brought together agroup of organizations funded by the foundation’s Pri-vate Sector Training Related Investments in Low-WageWorkers Initiative. Ford’s motivation was to invite thisdiverse group of fundees, focused on various aspectsand interests in workforce development, to gain expo-sure to one another’s ideas and identify opportunitiesfor collaboration. The group, now known as Partner-ship for Employer-Employee Responsive Systems(PEERS), represented a wide range of member organi-zations, with large and varied constituencies.

PEERS members not only had complementary and, insome cases, parallel workforce development researchagendas, they also had existing partnerships and cooper-ative relationships.1 A common interest among PEERSmembers was gaining a better understanding of the roleof workforce intermediaries. In particular, memberswanted to identify aspects of the public, private, andnon-profit structure that make it difficult for employersto access existing workforce intermediary resources.Thus, PEERS developed a broad research question:What works and does not work with regard to pri-vate-sector employers’ ability to access intermedi-aries to provide education, training, and otheremployment supports to low-wage workers? Fromthis, a simple research premise emerged: Workforceintermediaries that engage employers in a coopera-tive and collaborative manner may be the ones mostlikely to generate benefits for both workers andemployers.

To test this hypothesis, the PEERS members leveragedtheir organizational resources and core competenciesto:

• Create a framework to determine supply and demand-side characteristics of workforce intermediaries;

• Design and test a compact set of portable demand-side survey questions to identify employers’ percep-tions and experiences with workforce intermediaries;and

• Analyze the results of a uniform demand-side surveydistributed through PEERS member survey channelsto generate common demand-side data from diverseconstituencies in an efficient, low-cost manner.

This two-year research effort resulted in findings thatsuggest the following:

When employers use workforce intermediaries toimprove or link jobs or to locate or provide skillstraining and employment supports, both workersand employers benefit. However, when employersuse workforce intermediaries only for placementand/or job matching, workers’ wage prospectscan be hindered and whether any benefit accruesto employers is unclear.

This paper summarizes the collective work of a uniquepartnership. Part I outlines the historic context that ledto the emergence of workforce intermediaries. Part IIpresents the PEERS typology of workforce intermedi-aries. Part III presents the methodology, results andanalysis of the PEERS employer survey. Part IV presentsthe research findings. The conclusion discusses implica-tions for future research.

This project was an extremely ambitious undertaking.The PEERS members hope that its collective legacy willbe a new conceptual framework for understanding thechanging structures and institutions that will increas-ingly define future interactions between the supply anddemand sides of the labor market.

O V E R V I E W

The Evolution of PEERS Research Questions

Workforce Intermediaries: Generating Benefits for Employers and Workers

4

As the 21st century begins, the prosperity of the UnitedStates depends increasingly on the strength of its workforce.The world is becoming one economy, and nations thatfully utilize their workers are more likely to thrive thanthose that do not.

There is a crisis emerging in America: the strength andresilience of our nation’s workforce. The future workershortage in the United States, the lack of worker skills, theincreasing wage gaps, the disjointed public programs, andthe absence of business participation all contribute to thecrisis. But most importantly, it is the failure of our nationto recognize and respond to these challenges that presentsthe greatest risk.

Over the past twenty years, a dramatic increase in the sizeand skill of America’s labor force has driven its economicgrowth. Baby boomers were in their prime employmentyears, and large numbers of women entered the laborforce. New workers emerged far more educated than thosethey replaced. The number of college-educated workersmore than doubled.

These trends have ended. More than one third of thenation’s current workforce lack the basic skills needed tosucceed in today’s labor market. During the next twentyyears, the American workforce is expected to grow by onlyhalf of its earlier pace: there will be no growth of native-

born workers in their prime working years; the percentageof the labor force composed of four-year college graduates ispredicted to stagnate over the next two decades; the num-ber of workers with two-year degrees and skill certificateswill fall far short of the economy’s needs.

Globalizing competition and accelerating technologicalrequirements in both domestic and export sectors exacer-bate these labor force trends. Taken together, these trendswill lead to severe consequences for the vibrancy of theAmerican economy and businesses. Problems on the hori-zon include:

• Unfilled jobs and productivity;

• Skill shortages;

• A decrease in regional economic competitiveness forsome of the nation’s cities and rural communities;

• A loss of jobs to overseas workers.

However, these problems can create opportunities to betterinvolve overlooked labor market pools in the United States.

A strong economy depends on labor force growth andincreased productivity. But if the nation’s labor force doesnot grow, then we must find ways to increase the produc-tivity of all American workers to meet the demands offuture jobs.

F O R E W O R D 2

Workforce: The Emerging Crisis in America


5

The changes of the last 30 years have structurally trans-formed the relationship between employer andemployee. From 1945 through the mid-1980s, employ-ers provided employees clear internal paths to recruit-ment, promotion, and career advancement, with thefrequent promise of lifelong employment.3 In addition,the public job-placement and training system served theunemployed and others who, for one reason or another,were excluded from mainstream labor markets.

But from the mid-1970s through the mid-1990s, thebusiness environment changed in ways that made theseinternal labor markets more costly to maintain. Changesincluded deregulation, increased international trade andinvestment, declining union density, slower productivitygrowth, and the continuing economic shift from goodsproducing to service-producing industries. These fac-tors made employers seek labor market flexibilityregarding who they hired, for how long, for how much,and for which tasks. To obtain this flexibility, somefirms adopted high-performance work systems that ben-efited workers and increased productivity. Others, how-ever, minimized the number of full-time jobs, adjustedto fluctuations in demand with contingent workers, andincreasingly relied on external labor markets to providea steady stream of skilled, trainable workers. Most firmscombined elements of these strategies.

This process, however, tended to dismantle many of thecareer ladders that traditionally moved entry-level work-ers up in the hierarchy. Career ladders were replacedwith new labor market practices, resulting in increasingnumbers of workers having tenuous, indirect, or tempo-rary ties with their employers.4 This transformation hascaused an unprecedented rise in wage inequality and amarked deterioration of economic welfare and job sta-bility for workers most vulnerable to changing employ-ment practices—those without a high school or collegeeducation, the young, non-whites, and others with realor perceived employment barriers.

The new labor market also challenges employers. In thetight market of the late 1990s, employers found thatnew workers were hard to find and even harder toretain. Experts predict that this trend will only worsen,

despite the recent downturn in the economy. Firms thatrely on a steady supply of entry-level, low-wage workerswill be forced to devise creative human resources prac-tices and form unique external partnerships to moreeffectively recruit, hire, maintain, retain, and advanceworkers.

These changing relationships have emphasized the needto restructure the labor market to benefit both employ-ers seeking a well-trained competitive workforce andjob seekers and workers looking for career-advancing,family sustaining employment. Today, U.S. tax dollarssupport workforce development through a fragmentedand under-funded system. In many communities,employers report that the publicly funded workforcedevelopment system does not meet their needs.Employers’ engagement in the design and implementa-tion of workforce development programs has beensuperficial at best. Despite the structural transformationof work, publicly funded workforce programs remainconstrained by funding dictated by supply-side consid-erations and political boundaries. This is at the expenseof an equally important demand-side regional economicframework. Systems improvements have proved elusive,leaving employers struggling to find workers who canincrease their productivity and workers struggling tofind and keep jobs with sustainable wages.5

Increasingly, national, state and local communities areturning to entities that can convene, facilitate, broker,and bridge gaps among stakeholders to improve theworkforce system for employers and workers. Theseentities are known as “workforce intermediaries.”

The Emergence of Workforce Intermediaries

A workforce intermediary generally refers to an organi-zation or entity that coordinates, facilitates, or brokersthe matching of employers who are seeking qualifiedworkers and workers (or potential workers) who areseeking “good” jobs. For many years, public sectoremployment services, union hiring halls, and for-profittemporary agencies filling short-term staffing needshave performed these functions. In recent years, how-ever, new types of workforce intermediaries have cre-

I. The Structural Transformation of Work


6

atively expanded the size and range of their activities toplay a critical role in aligning the needs of employersand workers in the current labor market.6

A key to the expansion of the role and effectiveness ofworkforce intermediaries was the recognition that theworkforce system has two customers—the employeeand the employer. In addition to this dual-customer,demand-driven focus, workforce stakeholders also real-ized that employer engagement was vital in improvingthe workforce development system for low-income indi-viduals. The passage of the Workforce Investment Actof 1998 further validated the focus of a market-drivensystem when it mandated a transition from the supply-side Private Industry Councils to the employer-ledWorkforce Investment Boards.7

There are over 200 examples of organizations in com-munities across the nation that operate as this newbreed of workforce intermediaries. These intermediariestake many forms—community-based organizations,organized labor, employer organizations, communitycolleges, temporary staffing agencies and workforceinvestment boards. Generally, however, these workforceintermediaries identify and aggregate the labor andskills needs of employers by performing various combi-nations of a range of functions:

• Convening and supporting employers;

• Brokering and providing services;

• Improving education, training and supportive serv-ices;

• Conducting research and development;

• Helping to create skill standards and career paths andinfluence wages and benefits;

• Helping govern/improve the workforce developmentsystem;

• Assuming some of the business risk and reduce fixedlabor costs associated with training and recruitment.

In the volatility of today’s economy and with the pro-jected demand for entry-level workers, this new type ofworkforce intermediary is destined to become a fixtureof regional and national labor markets. Workforce inter-mediaries will almost certainly play a key role in influ-encing the business practices that shape the lives of cur-rent and future low-wage workers.

The increasingly important role of workforce intermedi-aries was further validated by the interest and conveningof the 102nd American Assembly. In February 2003, 75leaders from business, labor, academia, government,media, and non-profit organizations gathered for threedays to examine “policies, approaches and actions thatneed to be taken to assure that workers have access toeconomic opportunity and to assure that employershave access to the skilled workforce required for themto be globally competitive.”8 The approach advocatedby the American Assembly requires the transformationof existing policies and programs so that they are moreresponsive to local labor market conditions. Thisapproach challenges the existing workforce develop-ment system to redefine its underlying assumptionsabout customers and services by forging new results-driven, dual-customer partnerships and building thecapacity to flexibly serve the needs of workers andemployers.

Developing the PEERS Research Agenda

A common interest among PEERS members was gain-ing a better understanding of the role of workforceintermediaries. In particular, members wanted to iden-tify aspects of the public, private, and non-profit struc-ture that make it difficult for employers to access exist-ing workforce intermediary resources. Thus, PEERSdeveloped a broad research question: What works anddoes not work with regard to private-sector employ-ers’ ability to access intermediaries to provide edu-cation, training and other employment support tolow-wage workers? From this, a simple researchhypothesis emerged: Workforce intermediaries thatengage employers in a cooperative and collaborativemanner may be the ones most likely to generate pos-itive benefits for both workers and employers.

All PEERS members knew of specific examples of suc-cessful partnerships between workforce intermediariesand employers. The group’s research goal was to test itshypothesis by identifying and analyzing the success fac-tors of these partnerships as a first step toward develop-ing road maps for replication.

PEERS found that despite the mounting interest in thechanging role of workforce intermediaries, most exist-ing research analyzes employee needs (the supply-sideof the labor market) or presents case studies of specific


7

types of intermediaries. The demand-side perspective onthe expanding network of workforce intermediaries isoften missing.

PEERS also encountered two major obstacles inresearching workforce intermediaries:

• Lack of a systemic way to classify workforce inter-mediaries: Thousands of actors play a variety of rolesthat affect the employment interactions of employersand workers, with no single entity organizing, coordi-nating or overseeing.

• Lack of common language: The language,acronyms, context, and nuances of the workforcedevelopment field are foreign to most employers—particularly small and medium-sized employers whoare in greatest need of its resources. Any broad-basedsurvey of employer perceptions of workforce interme-diaries would have to begin by developing commonand understandable language to which the employercould effectively respond.

Research into the effectiveness of specific types of work-force intermediaries—what works—has not been exten-sive. A 2001 PEERS scan of the body of knowledge andresearch on workforce intermediaries found:

• A supply-side bias: Much research has been heavilyoriented toward understanding how intermediariesserve the supply side rather than the demand side ofthe labor market. The impacts studied focused mostlyon individual outcomes, such as placement rates,rather than employer outcomes, such as productivitylevels. PEERS found little research on the intermedi-ary-employer relationship from the employer’s per-spective.

• Lack of a comprehensive typology of workforceintermediaries: Almost no comparative research sys-tematically compared the advantages and disadvan-tages of multiple types of intermediaries.

• Lack of quantitative research and data: Compre-hensive quantitative studies gathering empirical dataon large numbers of intermediaries were rare, particu-larly on the demand-side. Few qualitative studies,such as case studies or demonstration projects, exam-ined the effectiveness of workforce intermediaries.

PEERS considered these factors and used the collectiveinterests and strengths of member organizations indesigning research and gathering data on the demand-side effectiveness of workforce intermediaries.


8

PEERS’ first step was to create a typology of workforceintermediaries—a snapshot of the range of workforceprograms and entities geared to low-skilled workersavailable to employers. This typology would serve as apreliminary classification system to guide the design ofemployer survey questions, provide a framework formapping promising demand-side workforce intermedi-ary practices, and inform future research.

A clear typology was also needed to develop a commonlanguage and framework so that policymakers and otherinvestors in workforce intermediary structures couldunderstand and discuss the important role of intermedi-ary organizations. This typology needed to capture therange and distinctiveness of the variety of institutionsserving as workforce intermediaries.

In theory, the typology could be used to investigate:

• The strengths and weaknesses of different types work-force intermediaries in helping low-income individu-als connect with employers and job opportunities,and vice versa;

• The various types of workforce intermediaries and theprimary dynamics to which they are designed torespond;

• The effectiveness of categories of workforce interme-diaries on the demand versus the supply side of thelabor market, and

• The distribution of existing workforce intermediariesacross the supply-demand continuum.

Designing the PEERS Typology

In reviewing the academic and practitioner-orientedliterature on workforce intermediary typologies, PEERSresearch uncovered four distinct intermediary classifica-tions:

• Organizational form: Workforce intermediaries clas-sified according to the “sector” in which the interme-diary is located (e.g., whether the intermediary is apublic, private for-profit, or private nonprofit organi-zation).

• Client-Based: Workforce intermediaries classifiedaccording to the kinds of people or organizations theyserve (e.g., job-seekers, incumbent workers, employ-ers).

• Structural: Workforce intermediaries classifiedaccording to the structure of the relationships

II. The PEERS Typology of Workforce Intermediaries

T A B L E I

The PEERS Typology of Workforce Intermediaries

Serves Primarily Serves EmployerServes Workers Single Employers Consortia

Placement and Job Matching(Operates on supply side only andaffects supply side only)

Skills Training and EmploymentSupports (Operates on supplyand demand sides; affects onlysupply side)

Improving or Linking Jobs(Operates on supply and demandsides, affects both sides)

PEERS Demand-Side Preference Cell


9

between the workforce intermediary and its employ-ers, workers, service providers, and/or other interme-diaries (e.g., a consortium of employers or an individ-ual employer).

• Functional: Workforce intermediaries classifiedaccording to the kinds of activities in which theyengage and/or the effects of those activities on thelabor market (e.g., whether the intermediary providesplacement services, connects workers or employers totraining, or creates career ladders).9

While all of the typologies found in the literature wererelevant to the problems that employers of low-wageworkers face in accessing workforce intermediaries, fewwere based on any theory about workforce intermedi-aries or about the labor markets in which they operate.In addition, none seemed able to encompass the charac-teristics embodied in the above classifications. Thus,PEERS created a new typology derived from the litera-ture, rather than adopting any existing typology. (For amore in-depth discussion of typology design methods, seeAppendix A: Typology Design Methods.)

The PEERS workforce intermediary typology catego-rizes intermediaries along two independent dimensions:(1) the primary customer the workforce intermediaryserves and (2) the side of the labor market in which theintermediary operates and influences. Table 1 illustratesthe typology on which PEERS based its research.

1. The primary customer. The horizontal axis repre-sents the primary customer:

• Workers

• Primarily single employers

• Employer consortia10

In the first category, ‘Workers’ the organization hasvery little involvement with employers, moving tothe second category in which the organizationengages individual employers and addresses theirspecific needs, and on to the third category in whichthe organization is able to work with a number ofemployers, aggregating their needs and addressingrecurring issues in the local labor market.

2. The side of the labor market (supply/demand).The vertical axis represents the supply and/ordemand the side(s) on which the workforce interme-diary operates and has a direct influence:

• Placement and Job Matching: These workforceintermediaries directly affect the supply side byplacing workers in jobs or matching job seekerswith job openings. Because they require nodetailed knowledge of employers’ operationsbeyond the job qualifications specified in a joborder, they need not work closely with employers.They affect workers directly by supplying informa-tion or personal contacts that help them find jobs,but they do not directly change the nature of thejobs offered by employers.

• Skills Training and Employment Support:Workforce intermediaries that provide or brokerskills training or other employment supports oper-ate on both the supply and demand sides. Sincethey work closely with employers to determine thekinds of training jobs require and work closely withworkers to link them to the appropriate training,they change the characteristics of workers by help-ing them gain new skills. However, like placementand job-matching workforce intermediaries, theydo not directly change the nature of jobs.11

• Improving or Linking Jobs: Workforce interme-diaries that redesign or change the nature of jobsand careers by working with employers to createcareer ladders, raise wages, or redesign the contentof jobs must work closely on both the demand andsupply side. Unlike other kinds of workforce inter-mediaries, they change the nature of jobs (or atleast the nature of linkages between jobs, as incareer ladders).12

PEERS combined the two dimensions to produced ninecells into which workforce intermediaries can be classi-fied. The cells are not rigid and operate as continuum.Many programs straddle the lines and do not fit neatlyinto one single cell. Likewise, a workforce intermediarymay operate several different types of programs thatcover the spectrum of typology cells.

Using the PEERS Typology

Given the group’s convergent interests, PEERS’research agenda concentrated on programs that prima-rily fall into the lower right cell—the PEERS Demand-Side Preference Cell (the PEERS cell)—focusing onimproving or linking jobs and serving employer


10

consortia. However, since programs are often fluid andspill over into neighboring cells, research also coveredworkforce intermediaries that provide skills training,employment supports and career advancement andassist single employers. The sidebars provides examplesof several of these programs (see above and next page).

PEERS developed placement criteria and identifiedworkforce intermediary programs representative of eachtypology cell. This exercise tested the typology’s rele-vance and refined it to encompass the widest possiblerange of existing workforce intermediaries. Althoughthis exercise is not the focus of this paper, it could beused to:

• Classify well-known workforce intermediariesdescribed in the research and practitioner literature;

• Match practices with specific type of workforce inter-mediaries (e.g., placement and job-matching work-force intermediaries that serve workers or job/career

redesign workforce intermediaries that serve employerconsortia);

• Identify practices specific to the type of workforceintermediaries; and

• Develop type-specific measures of success for con-ducting benchmarking surveys of workforce interme-diary practices.

Developing the PEERS Hypotheses

Using the PEERS cell, hypotheses were developedregarding effectiveness in achieving broad economic orsocial objectives, such as improving worker and firmproductivity. PEERS used the following hypothesesabout the effects of workforce intermediaries in thefunctional vertical-rows of the typology to design itssurvey:

• All intermediaries are not created equal: The pre-ceding hypotheses imply an additional fundamentalPEERS hypothesis—that simply using a workforceintermediary, in and of itself, has no effect on eitherproductivity or wages. The effects of intermediary usedepend on the kind of intermediary the employerchooses.

• Improving or linking jobs: Workforce intermedi-aries that directly improve jobs or link them together,such as by developing career ladders, would beexpected to increase productivity. Presumably,employers use intermediaries for this type of restruc-turing as a way to increase productivity. Higher pro-ductivity would be expected to lead to higher wages.In addition, some workforce intermediaries, such aslabor unions, may raise wages directly while simulta-neously helping improve jobs or inducing employersto improve jobs in other ways.

• Skills training and employment supports: Work-force intermediaries that broker or provide training orother employment supports do not necessarily have adirect effect on either wages or productivity. If train-ing does not improve workers’ ability to do their cur-rent jobs, or if employers do not redesign jobs in waysthat take advantage of training, then training will notaffect wages or productivity.13

• Placement and job-matching intermediaries: Theeffect of workforce intermediaries that engage only in


11

Training & Upgrading FundAFSCME District 1199CPhiladelphia, PA

The challenge: Critical shortages of qualified health careprofessionals and a population lacking access to goodjobs and challenging careers.

The solution: The city’s largest health care workers’union prepares nursing and medical professionals tomeet tomorrow’s health care needs.

How it works: Launched 30 years ago and now open toall local residents, the Training & Upgrading Fund’s variedprograms help more than 10,000 disadvantaged individu-als earn good jobs and advance promising careers in thehealth fields. A busy inner-city learning center assistslow-income students and adults with remedial course-work, career counseling and job training for positions innursing, claims processing, child care, and more. A spe-cial program for laid-off hospital workers trains andplaces them in skilled jobs needed in hospitals, nursinghomes, and other settings. Other programs address thespecial needs of welfare recipients. Throughout, a focuson career ladders encourages trainees to advance eco-nomically within the industry. In its nurse-training pro-gram, for example, the union helps trainees move fromcertified nursing assistants to licensed practical nurses—and then to highly skilled and well-paid registerednurses.

placement and job-matching is not predetermined.They could have positive, negative, or no effects onwages and/or productivity.14


12

Wisconsin Regional TrainingPartnership

The challenge: After a sharp decline, the manufacturingsector picks up new steam—only to find a severe short-age of qualified workers.

The solution: In Milwaukee, an innovative partnershipof employers and unions helps member companiesrecruit and retain a qualified workforce, and it helps low-income, unemployed, immigrant, and young workersaccess better jobs.

How it works: The partners in the Wisconsin RegionalTraining Partnership established a non-profit organiza-tion that works with employers to identify job openingsand the skills required for those jobs. It coordinates theefforts of local unions, community colleges, and otherpublic agencies to develop training programs providingjob seekers the skills needed to succeed and upgradingthe skills of incumbent workers. The local YMCA andother community organizations help WRTP’s clients over-come barriers like childcare and transportation needsthat could impede success. And the results are a testa-ment to this workforce intermediary approach: over thelast four years, WRTP has placed into family-supportingjobs more than 1,000 inner-city residents—many of themwelfare recipients, ex-offenders, and others with seriouschallenges and little hope of climbing out of poverty.Program leaders say a key to their success is adaptabilityin the face of economic change. Indeed, the program’srecent diversification into industries other than manufac-turing—notably, health care, hospitality, and customerservice—has enabled it to grow despite the recession.

T A B L E I I

Summary of PEERS Typology Derived Hypotheses

Expected Effect on Expected Effect onType of Intermediary Productivity Wages

Placement and Job Matching Increase, Decrease, or No Change Increase, Decrease, or No Change

Skills Training and Employment Increase or No Change Increase or No ChangeSupports

Imrpoving or Linking Jobs Increase Increase

Connecticut Business &Industry Association and Workforce Innovation Networks

The challenge: Major job losses, failing schools, andwidespread unemployment among disadvantaged andunskilled workers.

The solution: In Hartford, the state’s powerful businessand industry association helps prepare a skilled work-force for local employers through the development ofpublic/private-sector partnerships in education, training,and other key supports for low-wage workers.

How it works: With 10,000 members comprising all sec-tors of the state’s economy, the Connecticut Business &Industry Association (CBIA) is piloting a workforce inter-mediary approach of its own. CBIA and its main partner,Workforce Innovation Networks, identified five local busi-nesses employing 50+ low-wage, low-skilled workerswhom the employers had difficulty retaining or advancing.Leveraging private and government training funds, Indi-vidual Training Accounts, and other supports for disad-vantaged workers, CBIA provides its own customizedtraining and brokers workforce services from outside ven-dors. Through regular visits, CBIA is evaluating employ-ees’ progress and assessing employers’ satisfaction. CBIAalso serves as the employers’ arm of the local One-Stop,ensuring that the public workforce system is more respon-sive to business members’ needs. The record to date sug-gests that employer-led associations like CBIA can be veryeffective in helping dual customers: disadvantaged work-ers who need good jobs and employers who need commit-ted, skilled workers.

Table II summarizes the hypotheses about the effectsdifferent types of workforce intermediaries have onwages and productivity. The PEERS survey tested thesehypotheses.

PEERS member organizations use a variety of formaland informal communication vehicles—surveys, ques-tionnaires, personal interviews, and focus groups—togather data and inform their individual constituencies.PEERS initially attempted to develop a common set ofmetrics and questions that could be inserted into mem-bers’ surveys to gather employer perceptions, experi-ences, and desires about how they use workforce inter-mediaries. The intent was, for the first time, to leveragethe data-gathering activities of member organizationsand generate common data on workforce intermediariesfrom diverse employer constituencies in an efficient,low-cost manner.

Within the first few months of the project, however,logistical and substantive complexities forced PEERS toreadjust its data collections goals and expectations.Gathering common data was difficult since the timingof surveys was incompatible with PEERS’ researchschedule and some members did not conduct directemployer surveys. PEERS was able to add a set of work-force intermediary-related “test questions” into theemployer surveys of the Initiative for a CompetitiveInner City, Center for Workforce Preparation, andMichigan Manufacturing Technology Center (MMTC).

Getting the questions right became the key challenge.The disappointing results from first test questionspointed to the fact that the language of workforce inter-mediary professionals is not always understandable toemployers. In response, PEERS set more realistic datacollection goals: it reduced its data collection activitiesto a more targeted long-term approach. This involvedfielding a single “flag” question and systematicallydeveloping a tested, comprehensive workforce interme-diary survey targeted to employers who could beinserted into a variety of future surveys conducted by abroad range of interested organizations.

Employing the Phase I Test Survey

In March 2002, PEERS was able to insert a single flagquestion into MMTC’s Spring Survey of Manufacturers(test survey). The flag question was designed to gaugehow well managers of small and medium-sized busi-

nesses would understand questions about workforceintermediaries and to what extent their companies useddifferent types of workforce intermediaries. The flagquestion asked:

Considering only [your direct labortraining/outside training], how did you getconnected to the provider(s) of that training?

The question, embedded in the human resources sec-tion of the survey, referred back to two previous ques-tions:

• The number of direct-labor, shop-floor assembly, andmachine-operator personnel, since it was assumedthat this group would be the home, disproportion-ately, of low-wage, often new-entrant workers; and

• The firm’s spending on outside training for direct-labor personnel.

The survey was sent to 565 small and medium-sized(20-499 employees) U.S. manufacturing companies. Ofthe total 220 responding,

• 99 were in metal-forming, primarily metal stampers;

• 63 were shops making machined parts or assembliesmade up of machined parts; and

• 58 were plastics processors, primarily injection mold-ers.

Of the total respondents, 177 responded to the flagquestion. Of these, 72 (40.7 percent) stated that theydid not use any external resources to identify and qual-ify training resources for their direct labor workers. Ofthe 105 (59.3 percent) that reported using suchresources,

• 25 sought a referral from one or more local shops;

• 29 used their national trade association, either directlyor through its local chapter;

• 14 received help from a local manufacturers’ council;and

• 32 turned to another community organization,excluding unions or chambers.

Using the result of the flag question, PEERS developeda “wish list” matrix summarizing the ideal information

III. PEERS Employer Survey Design, Data Collection, and Analysis


13

needed from a broad, representative sample of compa-nies. (See Appendix B: PEERS Survey Instrument.) Crit-ical issues included:

• The types of activity for which employers use work-force intermediaries rather than going it alone;

• The extent to which employers look to workforceintermediaries to help address cross-company, sys-temic issues versus to help solve straightforward com-pany-specific problems such as finding entry-level per-sonnel; and

• The performance of workforce intermediaries relativeto employer expectations.

Executing the Phase II Survey

From November 2002 to March 2003, MMTC fielded asecond, more extensive survey. This Phase II survey,expanding on the three industries represented in the testsurvey, was sent to 865 representatives of the electronics,metal finishing, heat-treating, tool and die, and ma-chine-tool industries. The survey asked manufacturers to

• Describe their use of 10 types of workforce intermedi-aries during the prior two years;

• Indicate which of 18 workforce intermediary functionsworkforce intermediaries helped them address; and

• Rate the workforce intermediaries’ performance.

The 264 manufacturers responding were 68 metal-for-mers, 51 machined-parts makers, 47 plastic molders,and 98 from the other five sectors.15 No significantresponse differences emerged across sectors, but differ-ences between small and large company responses weresignificant. Specifically, larger companies were morelikely to use workforce intermediaries and they usedthem for a wider range of functions. This finding sug-gests that workforce intermediaries may not yet be play-ing what could be a key role—allowing smaller compa-nies to address complex workforce issues efficiently.

Table III lists the employers’ relative satisfaction withthe services they received from 10 types of workforceintermediaries.

Table IV lists 18 workforce intermediary functions andthe percent of manufacturers that reported having usedan intermediary to address the specific function. Thesurvey shows a high use of workforce intermediaries fortraditional workforce functions such as training, secur-


14

Respondents Using WorkforceIntermediary Type

Respondent Rating of Type of Workforce Intermediary (Percent)

Type of Workforce Intermediary Number Percent Poor Fair Good

Industry association 121 46.0 5.3 48.1 46.6

Temp agency 107 40.7 8.4 57.4 34.2

Consultant or MEP center 101 38.4 11.4 40.0 48.6

Community college 81 30.8 6.9 40.6 52.5

Chamber 68 25.9 12.7 50.9 36.4

Trade/vocational school 55 20.9 6.3 51.0 42.7

Other employer group 46 17.5 10.7 41.7 47.6

WIB or other One Stop 12 4.6 12.9 41.9 45.2

Public school district 12 4.6 15.8 52.6 31.6

Labor union 8 3.0 19.0 61.9 19.016

T A B L E I I I

Employer Satisfaction with Workforce Intermediaries

• Labor productivity as a measure of labor market out-comes for employers; 18

• Both wages and productivity as measured at the plantlevel.19

Employers usually are able to choose between using anintermediary to perform a workforce function, such asfinding new workers, and performing the same functionthemselves. To assess intermediary effectiveness,employers using intermediaries were compared bothwith employers who performed the function themselvesand those who did not perform the function at all.

To say that using a workforce intermediary to perform aparticular function raises productivity means that pro-


15

ing contract workers, and connecting companies topublic money.

Analyzing the Effects of Using WorkforceIntermediaries

The Phase II survey data tested the hypotheses derivedfrom the PEERS typology. PEERS believe that thisresearch may be the first attempt to use quantitativedata to assess the effects of workforce intermediaries onemployers and workers. In formulating and testing thehypotheses, PEERS used the following measures:

• Wages as a measure of labor market outcomes forworkers; 17

Workforce Intermediary FunctionFunction Not

Performed (Percent)

Function Performed (Percent)

Without WorkforceIntermediary

With WorkforceIntermediary

Provide worker training 3.9 42.1 53.9

Get local labor market information 42.6 8.6 48.8

Get national or industry labor data 45.7 6.3 48.0

Secure contract personnel 52.3 13.7 34.0

Identify sources of public funding 54.3 16.5 29.1

Secure public funding 61.7 12.7 25.7

Find new employees 41.4 34.7 23.9

Develop training plan 17.3 61.4 21.3

Find training providers 65.4 13.8 20.9

Develop worker standards, credentials 47.8 33.7 18.4

Perform job or task analysis 49.2 42.1 8.7

Identify employee skill deficits 72.9 19.6 7.5

Act as a broker with training providers 89.7 4.0 6.3

Redesign jobs 45.7 48.1 6.3

Design job or career ladders 73.7 21.6 4.7

Analyze employee turnover, retention 62.6 33.5 3.9

Provide employee child care 93.7 3.6 2.8

Provide employee transportation 92.9 5.1 2.0

T A B L E I V

Functional Uses of Workforce Intermediaries

ductivity is higher when employers use workforce inter-mediaries rather than when they perform the functionthemselves. It also means that productivity is higherwhen employers use intermediaries than when they donot perform the function at all.

In an effort to simply the analysis of the 18 functionsthat workforce intermediaries perform as described inTable IV, and to help translate these functions intotypology categories, Table V groups functions intoseven broad categories. These categories contain func-tions that employers tend to use simultaneously. Forexample, employers who used intermediaries to obtaincontract employees also tend to use intermediaries toobtain non-contract employees. Because the surveyasked employers the purposes for which they use inter-mediaries, rather than surveying intermediaries about

their activities, the data is able to test the hypothesesregarding the different functions of intermediaries, butnot the different types of intermediaries.

Three of the seven broad categories of intermediaryfunctions (shaded cells) equate easily into the verticalcategories of the PEERS Typology:

• Category 1 equates to Placement and Job Matching.

• Category 2 equates to Skills Training and Employ-ment Support.

• Category 3 equates to Improving or Linking Jobs

Although the remaining four categories of intermediaryfunctions do not correspond to typology categories,their inclusion in the analysis helps determine whetherthe typology was sufficient to capture the kinds of inter-mediary functions that affect productivity and wages.


16

Categories Specific Functions

1. Obtain new workers Secure contract personnel

Find new employees

2. Plan and/or provide training Develop training plan

Provide worker training

3. Measure and/or redesign jobs Develop worker standards, credentials

Perform job or task analysis

Analyze employee turnover, retention

Redesign jobs

Design job or career ladders

Identify employee skill deficits

4. Obtain labor market information Get local labor market information

Get national or industry labor data

5. Identify and/or obtain public funding Identify sources of public funding

Secure public funding

6. Identify, compare, and/or broker among vendors Find training providers

Act as a broker with training providers

7. Assist with child care or transportation Provide employee child care

Provide employee transportation

T A B L E V

Workforce Intermediary Function Categories

The findings of the PEERS research indicate thatemployers’ use of workforce intermediaries affects bothproductivity and wages. In determining these findings,PEERS tested the typology-derived hypotheses on thePhase II survey data using a regression model that sepa-rates the effects of workforce intermediaries on produc-tivity and wages from the effects of other employercharacteristics that affect productivity and wages.20

• All workforce intermediaries are not createdequal. Simply using a workforce intermediary, regard-less of the purpose for which the intermediary is used,has no significant effect on either productivity orwages. Determined different kinds of intermediaryfunctions have different effects on wages and produc-tivity.

• Using a workforce intermediary to measureand/or redesign jobs leads to higher productivityand higher wages, benefiting both employers andworkers. Employers who use intermediaries for thispurpose have higher productivity than those who donot, and the higher productivity leads employers toprovide higher wages. This finding supports thehypothesis that intermediaries that improve or linkjobs produce positive results for both employers andworkers.

• Using a workforce intermediary to plan and/orprovide training reduces labor turnover, whichthen leads to higher productivity and higherwages, benefiting both employers and workers.

Employers who use intermediaries to develop trainingplans and/or provide training have lower turnoverthan those that do not. Employers often invest intraining their workers to reduce labor turnover.Reduced turnover leads to higher productivity, elimi-nating the time spent for new workers to learn theirjobs. Although higher productivity does not alwaystranslate into higher wages, plants with higher pro-ductivity generally pay higher wages.

• Using a workforce intermediary only to obtainnew workers leads to lower wages, to the detri-ment of workers and to the possible detriment ofemployers. An employer who uses an intermediaryfor placement or job-matching has lower wages thanone who does not, perhaps because intermediaries ofthis type help employers find lower-wage employeesof a given quality than the employers could find ontheir own. The lower-wage employees may replacethe employer’s higher-wage workers or substitute forhigher-wage workers who the employer would other-wise have hired. Even if the intermediaries have nei-ther of these effects, they could place downward pres-sure on the wages of the employer’s existingworkforce. In any event, the consequences of thistype of intermediary use are detrimental to theemployer’s existing workforce. For the employer,though, the consequences may be either positive ornegative. Intermediaries may lower the employer’slabor costs. However, lower wages lead to higherlabor turnover, and higher turnover leads to lower

IV. PEERS Research Findings


17

Type of Intermediary Effect on Productivity Effect on Wages

Placement and Job Matching Decrease (Indirectly, because lowerwages lead to lower productivity)

Decrease

Skills Training and EmploymentSupports

Increase (Indirectly, becausereduced turnover leads to higherproductivity)

Increase (Indirectly, because higherproductivity leads to higher wages)

Improving or Linking Jobs Increase Increase (Indirectly, because higherproductivity leads to higher wages)

T A B L E V I

PEERS Findings on the Effect of Workforce Intermediaries

productivity, possibly because workers have to spendmore time getting up to speed on their jobs. Whetherthe overall result is good or bad for employersdepends on whether labor costs fall by more than, lessthan, or the same amount that productivity falls.

These findings suggest that when employers useworkforce intermediaries to improve or link jobs or

to locate or provide skills training and employmentsupports, both workers and employers benefit.However, when employers use workforce intermedi-aries only for placement and job matching, workersare hindered and employers are either helped or hin-dered. Table VI summarizes these results.


18

Far from complete, the PEERS findings point to theneed for additional research on workforce intermedi-aries. Because the PEERS-MMTC survey included onlymanufacturing firms primarily in the Midwest, deter-mining whether the results hold nationally and across abroader mix of industries would be important. TheMMTC sample of employers was also quite small.Therefore, testing the hypotheses on a larger sample isdesirable. The limitations of the PEERS survey questionmade it impossible to examine the productivity andwage effects of workforce intermediaries that serve onlyworkers, that serve employers individually, and thatserve employer consortia. Developing and testinghypotheses in this area would help extend the empiricalrelevance of the PEERS typology.

Because the research was based on a one-time survey,PEERS is unable to say whether the productivity andwage effects of workforce intermediaries are a long-term or a transitory feature of the labor market. In thelong run, as the strengths and weaknesses of workforceintermediaries become better known among employersand the capacity to access intermediaries more wide-spread, employers conceivably will decide whether touse an intermediary (rather than perform the samefunction themselves) in the same way they decidewhether to make or buy any other product or service.In that case, workforce intermediaries may have no

long-run effect on productivity or wages. The effectscould simply be due to employers’ lack of informationabout workforce intermediaries or lack of ability toaccess them. Research based on multiple years of futuredata would help determine whether this is in fact thecase.

In addition to motivating additional research, thePEERS members hope that the findings will motivateemployers, workers, employer and worker organiza-tions, governments, and foundations to support effec-tive labor market intermediaries. Different constituen-cies will, of course, have different criteria for judgingeffectiveness. We hope that the PEERS findings providethem with the facts they need to make those judgments.

Over the last two years, PEERS provided a uniqueopportunity to marshal the collective brain trust andcollaborative power of its member organizations. Weshared lessons and leveraged research to potentiallyunify our agendas around the issue of workforce inter-mediaries. We thank the Ford Foundation and encour-age the continued support of workforce developmentpeer learning initiatives in the future. We hope that ourlegacy will contribute to new conceptual frameworks forunderstanding the changing structures that govern thelabor market in the millennium.

C O N C L U S I O N

Implications for Future Research


19


20

PEERS created an ideal-typical typology for each of thefour classification systems identified in the literature. Todo this, the different typologies in each scheme werecollapsed into a single set of categories. Categories thatwere subsets of broader categories were eliminated.Judgment and organizational experience, case studies ofworkforce intermediaries, and economic theories helpedidentify the most salient categories from among thosethat remained. For simplicity, PEERS identified thesmallest number of meaningful categories in each classi-fication system.

As an ideal-typical sectoral typology, PEERS distin-guished between public-sector and private, nonprofitworkforce intermediaries, on the one hand, and privatefor-profit workforce intermediaries on the other. Thiswas because the differences in objectives and constraints(and therefore in activities) between private, for-profitworkforce intermediaries and other intermediariesseemed to be greater than the differences betweenintermediaries in any other sectoral categories. Theclient-based typology distinguished between intermedi-aries that primarily serve employers, that primarily serveworkers (or job seekers), and that attempt to serveemployers and workers equally. Although any interme-diary that connects employers and workers must serveboth, intermediaries seem to differ greatly in theirapproach to the labor market, depending on whom theyserve directly. The structural typology distinguishedbetween intermediaries that serve their clients primarilyone at a time (e.g., those that serve single employers)and that serve groups of clients (e.g., those that workwith employer consortia or other employer associa-tions).

The reason for this distinction was because employersare likely to want intermediaries to act differently whenasked to help with individual problems than when asked

to help with problems common to a group of employ-ers (e.g., the idiosyncratic training demands of individ-ual employers are likely to differ from those of an indus-try). Finally, as a functional typology, there is athreefold distinction that encompassed most of theintermediary activities included by other authors intheir functional typologies. Intermediaries are distin-guished among those that engage only in placementand job-matching, those that provide or broker skillstraining or other employment supports, and those thatredesign or change the nature of jobs and careers.

Further reflection and discussion revealed that thesefour typologies did not represent completely independ-ent characteristics of intermediaries. The structuraltypology seemed to apply to intermediaries’ relation-ships with employers but, based on organizationalknowledge and case studies, did not seem important indistinguishing ways in which intermediaries relate toworkers. Therefore, the structural typology was com-bined with the client-based typology to obtain a new setof categories: intermediaries that primarily serve work-ers, intermediaries that primarily serve single employers,and intermediaries that primarily serve employer con-sortia (or associations). Intermediaries that mainly servedisadvantaged workers are almost always public or non-profit and private for-profit intermediaries typicallyserve single employers.21 Therefore, intermediaries thatserve single employers could be either for-profit or pub-lic/nonprofit, while intermediaries that serve workersor employer consortia are generally public or nonprofit.In the interest of simplicity, and because of a focus onwhat intermediaries do and how they do it rather thanin whom the intermediaries are, the sectoral distinction(for profit versus public or nonprofit) was dropped fromthe final typology.

A P P E N D I X A

Typology Design Methods

E N D N O T E S

1 Partnerships included 1) Workforce Innovation Networks (WINs),a partnership among Jobs for the Future, the National Associationof Manufacturers Center for Workforce Success, and the U.S.Chamber of Commerce Center for Workforce Preparation, thattests and advances the idea that local employer organizations canplay productive roles in helping low-wage and less-skilled workersadvance in the labor market while meeting the human resourcesneeds of businesses; and 2) Promising Practices of Inner City Com-panies, a joint project of the Initiative for a Competitive InnerCity and Jobs for the Future to identify, encourage, and dissemi-nate innovative workforce development strategies utilized byAmerica’s fastest-growing, inner-city companies. See www.work-forceadvantage.org.

2 Keeping America in Business: Advancing Workers, Businesses, andEconomic Growth, excerpt from the group statement of the 1023

American Assembly, Feb. 6-9, 2003, Arden House, Harriman,NY.

3 Stephen Herzenberg, John Alic, and Howard Wial, New Rules fora New Economy (Cornell University/ILR Press, 1998); PaulOsterman, Securing Prosperity: The American Labor Market: HowIt Has Changed and What to Do About It (Princeton UniversityPress, 1999).

4 Annette Bernhardt, “ Improving Worker Welfare in the Age ofFlexibility,” Challenge: A Magazine of Economic Affairs, Septem-ber-October 1998.

5 Keeping America in Business: Advancing Workers, Businesses, andEconomic Growth, 1027 American Assembly, Feb. 6-9, 2003,Arden House, Harriman, NY.

6Chris Benner, “Building Community-Based Careers: Labor MarketIntermediaries and Flexible Employment in Silicon Valley,” Paperpresented at the Conference on Global Networks, Innovation andRegional Development Strategy, University of California, SantaCruz, November 1999.

7 Richard Kazis, “A Background Paper and Conference Summary,”Task Force on Reconstructing America’s Labor Market Institu-tions, Working Paper Number WP03, June 18, 1998, p.15.

8 Keeping America in Business: Advancing Workers, Businesses, andEconomic Growth, 10211 American Assembly, Feb. 6-9, 2003,Arden House, Harriman, NY, p. 1.

9 Functional typologies appear most often in the literature. 10 The term “employer consortia” includes all associations or other

organized groups of employers who act as a single unit. Thus, anindustry association or chamber of commerce is considered anemployer consortium.

11 The activities of these workforce intermediaries may indirectlychange the nature of jobs. If they increase the number of trainedworkers, then employers may redesign some jobs to requiregreater skills and, perhaps, to pay higher wages. Indirect effectsof this kind do not figure in this typology because virtually anyintervention on either the employer or worker side of the labormarket can have some indirect impact on the other side of themarket.

12 Because labor unions that act as intermediaries also engage incollective bargaining to improve wages and other job characteris-tics, union intermediaries always fall into this category even ifsome organizational separation exists between the union’s inter-mediary and its collective bargaining activities.

13 Training Broker Intermediaries can raise both productivity andwages indirectly if their training service improves workers’ jobperformance or induces employers to redesign jobs in ways thatraise productivity, and if the higher productivity translates intohigher wages. In addition, because training is costly and workerscan potentially change their employers, training gives anemployer an incentive to reduce labor turnover to recoup itstraining investment. The reduced turnover could lead to higherproductivity and the higher productivity could lead to higherwages.

14 Placement and Job Matching Intermediaries could increase pro-ductivity by improving the quality of the match between employ-ers’ jobs and the workers who fill those jobs. The higher produc-tivity could, in turn, lead to higher wages. Alternatively, theseintermediaries could help employers find lower-wage, possiblycontingent, workers to replace some of their existing workers orto substitute for higher-wage workers they would otherwise havehired. The lower-wage workers could be more or less productivethan the workers they replace, or they could be equally produc-tive. The lower wages could lead to increased labor turnover andreduced worker effort on the job, thereby lowering productivity.Despite the possible decline in productivity, employers couldbenefit if wages fell by at least as much as productivity.

15 The respondents average $15 million in sales, 110 employees,$29,065 annual worker pay, $182 in training per shop employee,and 36.6 percent in annual employee turnover.

16PEERS strongly suspects that the low “good” rating on laborunions as intermediaries reflects employer skepticism aboutunions’ “hiring hall” role rather than their other intermediaryactivities.

17 The PEERS Survey did not include questions about other aspectsof job quality, such as employee benefits.

18 The PEERS Survey did not collect information that would makeit possible to measure the financial performance of employersindependently of their productivity.

19 In this analysis, to say that using a particular kind of workforceintermediary raises wages means that the workforce intermediarymakes the wages of workers in a plant higher than they wouldotherwise be within that particular plant. This does not necessar-ily mean that the workforce intermediary makes the wages ofthose workers higher than they would be if they worked else-where.

20 The model also takes into account the interrelationships amongwages, productivity, and other factors.

21 Private for-profit intermediaries may serve higher-paid workersdirectly, but PEERS does not consider this in the typologybecause the focus of our work is on disadvantaged workers.


23

Workforce Intermediaries: Generating Benefits for ... · play a critical role in aligning the needs...

Documents

Transcript of Workforce Intermediaries: Generating Benefits for ... · play a critical role in aligning the needs...