BUilding Skills in New YorkState (BUSINYS)

Program Statistics and Analysis of the Outcomes

Prepared by the Division of Research and Statistics

New York State Department of Labor

October 2006

George E. Pataki, GovernorLinda Angello, Commissioner

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Table of Contents

Executive Summary

Introduction

1. Geographic Distribution of Firms Providing BUSINYS Funded Training

2. Number of Employees Receiving BUSINYS Funded Training Per Firm

3. Duration of BUSINYS Funded Training

5. Summary of Outcomes for Workers Who Participated in the BUSINYS Program

6. Outcomes of Workers Who Participated in the BUSINYS Program By Industry Classification

7. Comparison of Trends in Employment of Firms which Participated in the BUSINYS Program By Industry Category with Trends in Employment for the Entire Industry in New York State.

8. Trends in Average Wages of Trainees in Firms Which Participated in the BUSINYS Program.

Summary and Conclusions...... 22

Appendix...... 23

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Executive Summary

  • The BUSINYS program provides funding to companies in New YorkState to provide training to their incumbent workers. This report includes information on firms and trainees for whom training contracts ended in Program Year (PY) 2004, which started in July 2004 and ended in June 2005. During this time period, BUSINYS training contracts ended for 100 firms. Under these contracts, 6,848 workers were trained. Contracts in this group began between the 3rd quarter of calendar year 2003 and the 2nd quarter of calendar year 2005.
  • Firms throughout the State have received BUSINYS funding to provide training. For those with contracts ending in PY 2004, the Western Region of the State accounted for nearly one-half of firms (49) that received BUSINYS funding, whileonly two firms in this group were in New York City.
  • The average (mean) number of trainees per firm with contracts ending in PY 2004 was 68, while the median number of trainees per firm was 30. The most common training group size ranged from11 to 20 trainees.
  • For BUSINYS contracts ending in PY 2004, the contract duration of nearly one-half of firms ranged from 40 to 52 weeks, while another third of the firmshad contracts in the 14 to 26 week range.
  • BUSINYS training funds have been awarded to firms in most major private sector industry groups in the New YorkState. For those with contracts ending in PY 2004, over one third of firms were in the manufacturing sector, employing over 40 percent of the PY 2004 trainees. Twenty percent of trainees worked in companies in the finance and insurance industry.
  • More than 94 percent of workers who completed BUSINYS funded training were still employed in New YorkState threecalendar quarters after their training had ended.
  • Eighty-five percent of trainees who were employees of companies which received BUSINYS funded training continued to be employed by the same firm three calendar quarters after training had ended.
  • Ten percent of workers who received training through BUSINYS filed claims for Unemployment Insurance benefits after their company’s training contract ended; 3 % of employees trained filed for benefits while the contract was still open and active.
  • The average quarterly wages of workers who received BUSINYS funded training increased 16 percent from the calendar quarter before their company’s training contract started to three quarters after it ended; the median increased 13 percent. The largest increase was observed for workers who had been employed in finance and insurance – about $5,300. The smallest gains were experienced by trainees in the arts and recreation industry, about $74.
  • Trainees in the professional, scientific, and technical services industry had the highest employment rate threecalendar quarters after their contracts ended (97 percent). The lowest rate was for trainees in the health care and social assistance industry (89 percent).
  • Trainee wages were similar to those of all employees in BUSINYS companies, and followed similar patterns. Average and median trainee wages increased about 16 percent between the first quarter of 2003 and the first quarter of 2006. Average wages increased more than median wages, indicating that trainees with initially higher earnings experienced larger gains than those who began with lower earnings.
  • Trainees who were employed by the firms which provided BUSINYS funded training had higher wages, and experienced larger gains, than trainees employed by temporary agencies or leased employees. Trainees of the firms which provided training had wages about $2,500 higher than those employed by other firms initially, and this difference increased over the period to about $4,000.

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Introduction

In June 2002, Governor George E. Pataki announced a new initiative known as “BUilding Skills in New York State (BUSINYS).” The BUSINYS program uses funds from the Workforce Investment Act (WIA) to assist private sector employers in raising the skill levels of their current workforce. This report focuses on those firms and trainees involved in training contracts which ended during the 2004 Program Year (PY), which started July 1, 2004, and ended June 30, 2005.

The report describes the characteristics of the BUSINYS program such as geographic distribution of firms with BUSINYS contracts, average number of BUSINYS funded trainees per firm, length of training and industries of firms participating in the program. The report thensummarizes theoutcomes of the BUSINYS program:job retention of workers who received training through the program, changes in the earnings of program participants, and trends over-time in the number of employees working in participating firms.

For this study, the outcomes froma sample of100 firms and 6,848 employees who participated in the BUSINYS program were examined. The sample was defined as those firms and employees for whom Unemployment Insurance wage records were available during the period between the first quarter of 2003 and the last quarter of 2005. The sample includes firms in which BUSINYS contracts ended between July 1, 2004 and June 30, 2005. Contracts in this group began between the third quarter of 2003 and the second quarter of 2005.

1. Geographic Distribution of Firms Providing BUSINYS Funded Training

Firms providing BUSINYS-funded training to their incumbent workers were located throughout New YorkState, although New York City was underrepresented because of a delayed start. Only two firms in New York City had contracts ending between July 1, 2004 and June 30, 2005. Participation in the Western Region was exceptionally strong - nearly one-half of firms that completed BUSINYS funded training programs during this time period. Table 1presents the number of firms that had completed BUSINYS-funded training contracts during the period from July 1, 2004 through June 30, 2005 by region:

Table 1. Number of Firms With Completed BUSINYS Contracts by Region

Region 1/ / Number of Firms With Completed BUSINYS Contracts
Capital Region / 12
Down State Region / 26
HudsonValley Region / 2
Mid-State Region / 10
North Country Region / 1
Western Region / 49
State Total / 100

1/ Regional definitions are presented in Appendix A.

2. Number of Employees Receiving BUSINYS Funded Training Per Firm

The number of employees receiving BUSINYS funded training per contract, for contracts ending in PY 2004, ranged from one to 695. The average number of trainees per contract was 68, while the median number of trainees per contract was 30. As Chart 1 below shows, the most common training group size was 11 to 20 trainees.

3. Duration of BUSINYS Funded Training Contracts

The duration of BUSINYS funded training contracts ending in Program Year 2004 varied from five weeks to over 1 year, but as the chart below shows, nearly one-half of all BUSINYS funded training contracts were of 40 to 52 weeks duration while over one-third were in the 14 to 26 weeks range. Chart 2 shows the percent distribution of workers who received BUSINYS funded trainees by duration of contract.


4. Industries in Which BUSINYS Funded Training was Provided

Businesses involved in the training covered a wide range of industries includingconstruction; manufacturing; wholesale and retail trade;transportation and warehousing; information; finance and insurance; professional, scientific, and technical services; administrative and support services;education services; healthcare and social assistance;arts, entertainment, and recreation; and other services2.

The largest group of trainees (40.4%) were in manufacturing industries; the next largest (20.0%) were in finance and insurance. Chart 3 presents the percent distribution of workers who received BUSINYS funded training by industry category.

2/Other Services include repair and maintenance; personal and laundry services; religious, civic, professional, and similar organizations; and private households services.

5. Summary of Outcomes for Workers Who Participated in the BUSINYS Program

Most trainees who were employed in the last quarter of their company’s contract remained employed in New YorkState after the training was completed, for contracts which ended in PY 2004. Nearly 95 percent of those employed in New York State during the calendar quarter in which the training contract ended (N=6,645) have been found on New York State’s wage record database three quarters after the contract ended.

Chart 4 illustrates the percentage of workers who received BUSINYS funded training and continued to be employed in businesses in New YorkStatefor specified lengths of time after training. The employment rate of workers who received training declined as the number of calendar quarters after training increased. Some of this decline may beattributable to a migration of former BUSINYSparticipants to jobs in other states,acceptance of civilian positions in the Federal Government,enlistment in the military, or retirements.3/

3/ Employment is detected by the presence of trainees’ Unemployment Insurance (UI) Wage Records in the New York State UI Wage Record Data Base. Employers in other states, the Federal government, and the military are not required to report to the New York State UI Wage Record Data Base.

Most trainees were employed by the company which trained them; however, some were temporary or leased employees from other companies. Most trainees employed by the companies which trained them remained with their original companies after contracts ended, but some moved on to other jobs, as shown in Chart 5. Of those who were employed by the firm receiving BUSINYS funded training in the quarter when the training contract started, 85%were still employed by the same firm in the third quarter after the contract end date; fifteen percent were working at a different firm.

An indicator of the proportion of workers who received BUSINYS funded training and subsequently became unemployed is the percentage who filed claims for Unemployment Insurance benefits after their company’s contracts started and ended. Chart 6 presents the percentage of workers who filed claims for Unemployment Insurance after the start of BUSINYS funded contracts which ended during PY 2004. Only 12.9 percent of workers who participated in the program filed a claim for Unemployment Insurance after their company’s contract started; the overwhelming majority, 87.1%, filed no claims between the contract start date and the fourth quarter of 2005.

Chart 7compares the trends in the quarterly pre-training and post-training wagesof workers who received BUSINYS funded training. As the graph shows, the average quarterly wage increased significantly after training, with average wages increasing 15.8 percent from the first quarter before training to the third quarter after training. The median quarterly wage increased 13.1%. This trend was due to rising wages for all employees during the period examined, from the first quarter of 2003 to the first quarter of 2006.

6. Outcomes of Workers Who Participated in the BUSINYS Program By Industry Classification

The outcomes experienced by workers who received BUSINYS funded training varied significantly depending on the industry in which they were employed. Chart 8 compares the percentages of workers who received BUSINYS funded training and were employed three quarters after their company’s training contractended, by industry category, for contracts ending in PY 2004. As shown, the post-training employment rate was highest for workers who had received training in the professional, scientific, and technical services industry (97.0%), and lowest for workers from the health care and social assistance (88.8%) industry. Small samples sizes precluded a statistically reliable analysis of the post-training employment rate of trainees in the utilities; construction, transportation and warehousing; educational services; and other industries.

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Chart 9compares the change in quarterly earnings of workers who received BUSINYS funded training by industry category. The largest average gains in average quarterly wages, $5,316, were experienced by workers who received training while employed in finance and insurance. The smallest increase, $74, was experienced by trainees in the arts, entertainment, and recreation industry. Small sample sizes precluded a statistically reliable analysis of the earnings change of trainees in the utilities; construction; transportation and warehousing; educational services; and other industries.

7. Comparison of Trends in Employment of Firms which Participated in the BUSINYS Program By Industry Category with Trends in Employment for the Entire Industry in New YorkState.

The following charts display employment trends in major industry groups in New YorkState. The charts compare trends in employment for firms that provided their workers with BUSINYS funded training with trends in employment for all firms in each industry group. This analysis is not presented for those industry categories in which there were fewer than five firms with BUSINYS contracts. These charts are designed with two vertical axes: the scale on the left vertical axis applies to the employment levels of firms that participated in the BUSINYS program, while the scale on the right vertical axis applies to the total employment levels of the industry.

Chart 10 displays the employment trend for all BUSINYS firms from the first quarter of 2003 to the last quarter of 2005, and compares it to employment for all firms in all industries for the same time period. It shows that overall employment in BUSINYS firms fell slightly, about 5 percent, during this time period. A small number of very large BUSINYS firms in the manufacturing and wholesale trade industries accounted for most of the drop in total employment, as forty percent of BUSINYS funded firms increased employment; another forty percent decreased employment, and the remainder stayed constant. During this time period, overall employment for all industries rose slightly, about 5 percent. BUSINYS firms showed patterns of seasonality similar to those in all industries.

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Chart 10a shows that the decline in employment for manufacturing firms which participated in the BUSINYS program wassimilar to that of the manufacturing industry as a whole. Total employment in manufacturing firms with BUSINYS contracts decreased by about 6 percent during the period from the first quarter of 2003 to the last quarter of 2005, while total employment in all of manufacturing declined by 8 percent over the same period. Decreases in BUSINYS firm employment was due primarily to the influence of three large companies out of a total of 35 companies. Other, smaller companies gained employment over this time period.

Chart 10b illustrates that employment in the wholesale trade industry as a whole increased slightly, about 4 percent, during the period from the first quarter of 2003 to the last quarter of 2005, while a significant drop in total employment, about 15%,occurred during this time period among wholesale trade firms that participated in the BUSINYS program. Most of this decline was attributable to one large firm among the 9wholesale trade firms that provided BUSINYS funded training.

Chart10c indicates an eight percent rise in industry-wide retail trade employment over the period from the first quarter of 2003 through the last quarter of 2005, while the total employment in retail firms that provided BUSINYS-funded training to their employees remained relatively constant, dropping less than 1 percent, during the same period. Seasonality in employment numbers for the entire industry was not reflected by those for the BUSINYS firms, since they were dominated by large companies in the grocery and home improvement sectors, which are less affected by holiday hiring than the rest of the industry.

As Chart 10d illustrates, total employment in the finance and insurance industry rose slightly, about two percent,from the first quarter of 2003 tothe last quarter of 2005. The five firms in this industry providing BUSINYS funded training showed a similar pattern, gaining about 0.5 percent employment overall.

Chart 10e shows that total employment in the professional, scientific, and technical services industry rose about 8 percent over the period from the first quarter of 2003 through the last quarter of 2005, while the total employment of firms in that industry that provided BUSINYS funded training decreased 13 percent. One large firm, out of the 8 BUSINYS firms, accounted for most of the loss.