WIOA Pay-for-Performance is a Critical Tool for Equity and Opportunity (Third Sector Capital Partners)

By Celeste Richie

Along with other critical support services, the Workforce Innovation and Opportunity Act (WIOA) and its embedded Pay-for-Performance (P4P) provisions are critical to advancing performance-based contracting and improving long-term outcomes for those served by the workforce system. Despite the appetite for a better life for all individuals, many workforce programs today are unable to deliver similar high-quality results across all of their participants. Recent analysis has demonstrated the need to increase equity of outcomes, not just increased access to services, and WIOA P4P could be an active tool in this movement.

In a 2012 study conducted by the US Department of Labor (DOL), for example, women participating in Workforce Investment Act (WIA) Adult and Dislocated Worker programs were more likely than men to receive job training, but still earned considerably less after completing the program.¹ They were also significantly more likely than men to face a barrier to employment, especially single-parenthood and low-income status. This is a clear example of a population who received higher levels of services than others, but still experienced poorer outcomes. The main question is then: how can we use WIOA P4P to actively increase equity of outcomes?

There are several ways that WIOA P4P can provide the flexibility and window of opportunity to increase equity for people most in need.

  1. Refine performance measures to focus on most at-risk individuals:  Over the next few years, the DOL will be baselining WIOA performance measures, making it a great time for providers and government to reset their expectations and goals for program performance. WIOA requires local areas to shift their focus, increasing the minimum spending of youth funding on Out-of-School Youth (OSY) to 75 percent. This supports the goal of achieving positive employment and education outcomes for Opportunity Youth, youth who are disconnected from school and work and often face barriers such as homelessness, involvement with the juvenile justice or foster care system, or pregnancy and/or parenting status. While programs targeting these populations may cost more and ultimately result in a lower volume of service, going “deep” to connect the hardest-to-serve youth with sustainable career paths and living wages can ensure that individuals facing multiple barriers are not left behind. Creative partnerships with employers, such as Gap Inc. who runs the “This Way Forward” program, can expand the resources available to serve the entire Opportunity Youth population while reserving WIOA funds for those most at-risk. By using WIOA to shift contracts to pay based on outcomes rather than cost reimbursements, we can better assure that programs are truly improving the lives of those most in need.
  2. Shift our focus away from quantity towards quality: Our workforce system has historically seen a certain level of “churn,” in which participants interact with the system many times over the course of their lives. In an ideal situation, they would receive the high-quality services they need at each point in their career to help them advance. Unfortunately, many are placed into jobs that are not good fits or do not lead to a career path, and they are forced to return again and again to the workforce system without truly moving forward. It becomes harder to quantify how much this churn costs the system. WIOA funding can be used for a wide range of support services, such as “such as transportation, child care, dependent care, housing, and needs-related payments” and with a P4P contract, more flexibility on the provider’s part can lead to seamless service provision from the participant’s perspective.² WIOA P4P offers the opportunity to explore the return on investing fully in Opportunity Youth to our workforce systems.
  3. Target different outcomes based on the barriers facing a particular participant: If we want to focus on Opportunity Youth who have been involved with the juvenile justice system, for example, we may want to include an outcome payment point related to reduced recidivism. While this is not an “official” WIOA performance measure, it is relevant for this particular population. The flexibility to set P4P contract outcomes relevant to the population in need allows for improved services and data tracking systems. 

    For official WIOA measures, states and local areas already negotiate performance levels based on the population they are serving. A statistical model is used in these negotiations, and is run before and after the program to account for any changes in the anticipated service population. If a program ends up serving youth with more barriers to employment, the model would account for that, adjusting performance targets to better match the participants.
  4. Flexibility of “no-year” P4P funds: Funds used to carry out Pay for Performance strategies are available until expended. In other words, if outcomes are not met, the workforce board does not lose its funding, and there is room for innovation. A contract based on outcomes that results from WIOA P4P can ask service providers to be more comprehensive in service delivery, length of service, types of service and ability to link with other programs to ensure a wraparound youth-centered intervention that provides Opportunity Youth with what they need to succeed.

Third Sector is working with five workforce boards to leverage the Pay for Performance (P4P) provisions of WIOA to better serve Out-of-School Youth. Stay tuned to learn more how workforce boards are leveraging WIOA P4P to transition to an outcomes-based workforce system that is more equitable and accountable to the communities we serve.

 ¹Maxwell et. al. 2012. “How Are Women Served by the WIA Adult and Dislocated Worker Programs? Findings from Administrative Data.”

²Section 3. Definitions. (59) Supportive Services of the Workforce Innovation and Opportunity Act.

Celeste Richie is a Director in Third Sector's Washington, DC office.