Background

In 2000, approximately 59 million people aged 55 and over resided in the  United States. The proportion of people aged 55 and over living in each  state ranged from about 13 percent in Alaska to about 27 percent living in  Florida (see fig.1).
In program year 2000, older workers received employment and training  services from various federal employment and training programs,  including the Senior Community Service Employment Program (SCSEP),  the Workforce Investment Act (WIA), and Trade Adjustment Assistance  (TAA) programs. These programs have various eligibility requirements and  offer employment and training services through different mechanisms.
Title V of the Older Americans Act of 1965 authorizes SCSEP to promote  part-time community service activities specifically for low-income older  individuals and to foster economic self-sufficiency through unsubsidized  employment. SCSEP, funded at $440.2 million in program year 2001, is  limited to people 55 years and older with incomes at or below 125 percent  of the federal poverty level. For program year 2000, Labor allotted   78 percent of the funds to 10 national grantees, including the AARP  Foundation, Experience Works (formerly Green Thumb), and the National  Council on the Aging, Inc. (See appendix II for a complete list of national  grantees and funds expended in program year 2000.) The remaining   22 percent was allotted to each of the 50 states, District of Columbia,  Puerto Rico, and the other territories. At least 75 percent of SCSEP funds  must be used to subsidize participants’ wages—typically for minimum  wage jobs in nonprofit and public sector agencies. The remaining funds  may be used for such activities as assessments, counseling, training, and  job placement assistance. Section 502(e) of title V authorizes limited funds  to be used for projects placing older workers in unsubsidized employment  in the private sector. (See appendix III for more details on how these  funds were used in program year 2000.) These projects are intended to  emphasize training for jobs that reflect required technological skills.
TAA programs assist U.S. workers who lose their jobs because of  increased imports from, or shifts in production to, foreign countries. These  programs provide benefits such as trade re-adjustment allowances  (extended income support beyond normal unemployment insurance  benefits), services such as job training, and funds for job search and  relocation. Groups of workers or their representatives can petition the  Department of Labor for certification of eligibility to apply for services or  benefits under TAA programs. In fiscal year 2001, TAA programs received  about $407 million to provide income support and training benefits.
WIA specifies one funding source for each of the act’s main client  groups—adults, dislocated workers, and youths—and creates a system  whereby clients can obtain information about and access to a wide array  of job training, education, and employment services at a single location,  called a one-stop center. WIA specifies 17 partner programs that are to  provide services through the one-stop center, including SCSEP and TAA.  This partnership can take different forms, including physical colocation at  the one-stop center or providing electronic linkages to the partners’  programs. WIA requires that the adult and dislocated worker programs,  funded at about $2.5 billion in program year 2001, provide three levels of  service: (1) core job search assistance, including the provision of labor  market information, and a preliminary assessment of skills and needs;   (2) intensive job search assistance, including comprehensive assessments,  creation of an individual employment plan, case management, and short- term prevocational services; and (3) training, including skill upgrading,  literacy classes, and occupational training. Core services are available to  all job seekers, but WIA enrollment is required for intensive services and  training. Under the adult program, all persons aged 18 or older are eligible  to receive core services. In areas where funds are limited, priority for  intensive services and training must be given to recipients of public  assistance and other low-income individuals. The dislocated worker  program is generally for those individuals who have been laid off and are  unlikely to return to their previous employment. To be eligible for the  youth program, persons must be aged 14—21; have low income; and meet  at least one of six barriers to employment, such as being a school dropout,  homeless, or an offender.
When WIA replaced the Job Training Partnership Act (JTPA) in July   2000, it replaced the requirement that each state reserve five percent of its  adult allotment specifically for older worker services with the provision  that states can set aside up to 15 percent of their adult, youth, and  dislocated worker allotments to support statewide workforce activities.  WIA also contains a requirement that each state and local area receiving  WIA funds must achieve certain levels of performance on several  measures. The Department of Labor evaluates performance on these  measures to determine fiscal incentives and sanctions. Some measures are  common to both the adult and dislocated worker programs, such as job  placement and retention, but earnings are measured differently for the two  programs. For the adult program, the measure compares participants’  earnings before entering the program to their earnings after completing  the program and expresses the difference as an actual dollar amount. For  the dislocated worker program, participants’ earnings after completing the  program are expressed as a percentage of their earnings before entering  the program.
In a previous GAO report on WIA performance measures, we found that  established performance measures were a concern to state and local  officials because of the fiscal sanctions associated with failure to meet  them. We reported that the need to meet performance measures might be  the driving factor in deciding who receives WIA-funded services at the  local level. For example, local staff might be reluctant to provide WIA- funded services to job seekers who may be less likely to get and keep a job  or those who may be less likely to experience an increase in earnings.

	Older People Enrolled in Federal Programs Generally Receive Subsidized Community Service Jobs and Job Search Assistance

Approximately 12 percent of all older people who were not working and  wanted a job were enrolled in federal employment and training programs;  most of these individuals received subsidized community service jobs or  job search assistance, while a smaller number received training. The  majority of these older individuals, about 68 percent, were enrolled in  SCSEP. Other older workers may receive job assistance services without  being enrolled in a federal employment and training program, but these  individuals are not counted in program statistics.

		Programs Enroll about 12 Percent of Older People Who Want Jobs

We found that approximately 156,000 people aged 55 and older were  enrolled in SCSEP, TAA, and WIA adult and dislocated worker programs  between July 2000 and June 2001—representing about 12 percent of all the  people in this age group who wanted a job but were not working.  According to the Current Population Survey, an average of 1.3 million  people aged 55 to 90 years old were unemployed or were out of the labor  force and wanted a job during this same time period. Many of these  individuals consider themselves to be retired but wish to rejoin the labor  market. Some of these individuals are actively looking for work; others  have tried to find work in the past and have become discouraged from  continuing their job search. In terms of the 59 million people who were  age 55 and older in 2000, less than 1 percent was enrolled in SCSEP, WIA,  and TAA.
The total number of older people enrolled in these federal employment  and training programs is smaller than the number of people aged 55 and  older who may have actually received services. Although federal  employment and training programs count the number of people enrolled in  in-depth services, individuals who receive more limited or informal  employment assistance are not included in program statistics. Within the  WIA programs, for example, individuals can access self-service  employment resources, such as job listings, through entry-level core  services without enrolling in WIA. Similarly, within SCSEP, some older  people receive job search assistance from staff without being enrolled as  clients in the program. In Pennsylvania, for example, some SCSEP  providers maintain a job bank for older individuals who need help finding  a job but do not meet the income eligibility requirements for the program.
Of the 156,000 older people enrolled in the three federal employment and  training programs, more than two-thirds received SCSEP services. Our  surveys also show that more people aged 55 and over were enrolled in  WIA programs than in TAA programs (see fig. 2).
Although SCSEP only enrolls people aged 55 and over, the WIA and TAA  programs serve both older and younger individuals. We found that older  people make up a relatively small proportion of the total number of people  enrolled in WIA and TAA programs (see fig. 3). Our surveys show that both  the WIA dislocated worker and adult programs enrolled more older people  than the TAA programs.
To the extent that it could be determined, the three federally funded  employment and training programs that we reviewed reach a small  proportion of those likely to be eligible. Although different eligibility  requirements and limited data make it difficult to determine the number of  older people who qualify for the three federal employment and training  programs we reviewed, some information is available on the number of  older people enrolled in individual programs. For example, SCSEP  enrolled about 1 percent of adults aged 55 and older whose incomes would  make them eligible for services. Within WIA, the adult program enrolled  less than 1 percent of all people aged 55 and older who would have been  eligible on the basis of age. The percentage of eligible older people  enrolled in the WIA dislocated worker program and the TAA programs is  unknown, because national labor statistics do not track the population of  older people who qualify for these services. Nevertheless, information on  older people who have experienced mass layoffs shed some light on this  population. For example, the number of older people enrolled in the WIA  dislocated worker program represented about 14 percent of older people  who had experienced extended mass layoffs. Likewise, the number of  older people enrolled in the TAA programs constituted about four percent  of people aged 55 or older experiencing extended mass layoffs. However,  extended mass layoff data only provides a rough approximation of the  population eligible for these two programs because the data excludes  some older people who may qualify for services and includes others who  may not meet program eligibility requirements, particularly for the TAA  program.

	Older People Most Likely to Receive Subsidized Community Service Jobs and Job Search Assistance

Although WIA and TAA are seen as providing transitional services to help  unemployed people find jobs, SCSEP primarily provides low-income older  people with long-term subsidized employment. For those older people  enrolled in WIA and TAA programs, most received job search assistance,  while a smaller percentage received job training.
The 106,000 individuals who received SCSEP jobs worked part time in  nonprofit and governmental host agencies, and typically earned the  minimum wage. SCSEP participants worked in a variety of fields, ranging  from public works to health care; however, they most frequently held  positions in education and social service organizations. SCSEP community  service jobs vary and can include positions such as teacher aides,  librarians, day care assistants, receptionists, and nurse’s aides. Although  some of the host agencies provide services primarily to senior citizens,  most SCSEP jobs are with agencies that serve the general community.
SCSEP has historically focused on providing older people community  service opportunities and income support, rather than employment and  training services. However, recent legislative changes to the program have  emphasized the importance of transitioning SCSEP participants into  unsubsidized jobs. While some SCSEP administrators permit older people  to work in subsidized community service jobs for 15 years or more, other  SCSEP operators have instituted time limits—of 1 to 2 years—to  encourage participants to find unsubsidized employment. SCSEP  provides some job search assistance and training services to people aged  55 and over to help them find unsubsidized jobs. For example, many  SCSEP providers help participants create resumes and prepare for job  interviews. In addition, SCSEP operators have limited amounts of funding  that can be used to pay for classroom courses and on-the-job training at  private sector companies. For example, at least 14,000 older individuals— many of whom were also enrolled in the community service jobs  program—participated in SCSEP training programs between July 2000 and  June 2001 to prepare for private sector jobs.
People aged 55 and over also received job search assistance and training  services through WIA and TAA programs. Of the approximately 523,000  people enrolled in TAA and WIA adult and dislocated worker programs  between July 2000 and June 2001, about 49,600 were aged 55 and older. We  estimate that most of these older people received job search assistance,  while a smaller percentage received job training. Job search assistance  can include the provision of job listings and information on the skills  needed to obtain these jobs, career counseling, and interviewing and  resume writing workshops. Training includes remedial education classes,  and occupational skills training taught in a classroom or on-the-job.  Remedial classes focus on literacy and other basic education and work  skills, while occupational skills training prepares people for specific  careers. For example, some occupational skills training helps participants  obtain credentials or licenses for particular professions, such as nursing or  truck driving.
Within WIA adult and dislocated worker programs, older people received  job search assistance through core services before enrolling in the  programs and receiving intensive services and training. Of those people  aged 55 and over enrolled in these WIA programs, data suggest that about  half of these individuals also received training. In addition, many other  older people may have received job search assistance through WIA’s core  services without enrolling in the program and were not counted in  program statistics. Within the TAA programs, more people received job  training than job search services; however, only about 6,600 people aged  55 and over were enrolled in this program.
Across SCSEP, WIA and TAA, we found similarities in the characteristics  of the older people enrolled in these programs. For example, women  constitute the majority of participants aged 55 and over in all three  programs. Likewise, as shown in table 1, most older participants in each  program have at least a high school diploma or general equivalency  diploma.
Although older participants share some similar characteristics across  programs, the people enrolled in SCSEP tend to be older than those  enrolled in WIA and TAA programs. While the majority of SCSEP  participants are age 65 or older, approximately 80 to 90 percent of the  older participants in WIA and TAA programs are between the ages of   55 and 64. Older participants exiting WIA are more likely to be placed in  unsubsidized jobs than older participants exiting TAA and SCSEP (see fig  4).

	Providers Now More Likely to Include Older Workers in Services with Younger Workers, but Some Still Offer Special Services

Fewer providers now serve older workers through separate and specially  tailored programs, but some special services are still available to older  workers. Research findings on how older workers learn and whether they  need special services have been inconsistent, and providers under  different programs have taken various approaches to serving older  workers. Providers are less likely under WIA than under JTPA to treat  older workers as a distinct group requiring a separate program, because  WIA emphasizes a common service delivery system for all workers and  individual choice over services. As they always have, TAA providers  include older workers with younger workers rather than providing  separate services. SCSEP, which serves exclusively older workers, tailors  its job search and training services to older workers, and is colocated in  the one-stop centers.

		WIA Providers More Likely to Integrate Older Workers in Services with Younger Workers

Under WIA, providers are more likely to include older workers in services  with younger workers than to serve them in separate programs. WIA puts  greater emphasis than did JTPA on serving all workers together in one  common system and gives individuals more choice over the services they  receive. As a result, WIA providers are more likely to assess the needs of  older workers on a case-by-case basis, rather than considering them a  separate group that requires a separate set of services. Officials in 5 of the  10 local areas we visited said the implementation of WIA resulted in  greater integration of older workers in services with younger workers.  WIA staff members in 9 local areas we visited included older workers with  younger workers in job search activities, and 90 percent of the local areas  responding to our survey included older workers with younger workers in  job training services.
Although some research studies support the approach of integrating older  workers with younger workers, other studies have found older workers  benefit from separate programs. Several research studies support the view  that older workers do not have distinct learning needs and would not  benefit from separate services. For example, two studies found that the  diversity among older workers as to how quickly different older workers  learned new skills made it impossible to generalize about their  employment and training needs. Another study found that the most  effective training approaches for older workers are also the most effective  for younger workers. However, other studies found that while older  workers can learn the same skills as younger workers, they benefit from  instruction that is more hands-on, involves more one-on-one assistance,  and is slower-paced than what is typically available in most training  programs. In particular, older workers may benefit from separate, slower- paced computer training classes because some older workers may be  unfamiliar with, and intimidated by, computers.
Several WIA officials we interviewed concluded that older workers should  be included in services with younger workers because as a group, older  workers have no distinct employment and training needs. For example, a  local area in Florida said older workers do well in job training programs  serving people of all ages. In past years the local area offered a nursing  class specifically for older workers, but it cancelled this class in part  because not enough older workers wanted to take it. Similarly, a local area  in Massachusetts no longer offered training programs specifically for older  workers, and said older workers do not need such services. According to  this local area, instructional methods that are successful with younger  workers are also successful with older workers, and the fact that some  older workers prefer to take classes with their peers—just as some  younger workers feel more comfortable in classes serving only younger  workers—does not imply that older workers need separate classes.
One provision in WIA that has led to greater integration of older workers  with younger workers is the requirement that program participants choose  among training programs offered by qualified providers. Under JTPA, a  local area could contract with a training provider to operate a job-training  program designed for a specific group, such as older workers. WIA  generally prohibits such contracting, instead letting individual program  participants choose which training to attend. Local areas now issue  vouchers to program participants, which they use to pay for training  programs offered by qualified providers. Because individual program  participants choose which training program to attend, no program can be  restricted only to older workers, and older workers are more likely to be  integrated in training with younger workers. For example, a local area in  Pennsylvania used JTPA funds to contract with a provider for a training  program serving only older workers. Under WIA, program participants  choose among training programs offered by qualified local providers, and  none of these providers operates a program serving exclusively older  workers.
Another change under WIA that resulted in greater integration of older  workers with younger workers was the elimination of the JTPA older  worker set aside. Under JTPA, states were required to reserve a portion of  their funds for services to older workers. Some states passed set-aside  funds along to local areas, and others contracted directly with training  providers to serve older workers on a statewide basis. WIA provided states  with greater flexibility, allowing them to use their statewide activities  funds for a wide variety of purposes. Most have not opted to reserve  statewide activities funds specifically for older workers, preferring instead  to include older workers in the regular adult and dislocated worker  services available in the one-stop centers. Twenty-six percent of local  areas responding to our survey said that because of the elimination of the  older worker set-aside, they were less likely to target training programs  specifically to older workers, although older workers still had access to  training funded through WIA. Several local areas we visited also said they  were more likely to include older workers in services with younger  workers due to the elimination of the set-aside. For example, a one-stop  center in Massachusetts now includes older workers in job search and  resume-writing workshops available to workers of all ages, rather than  providing separate workshops for older workers as they once did.
Ten of the states responding to our survey chose to use a portion of their  program year 2000 statewide activities funds specifically for older worker  services. Some states designated funds for older workers because SCSEP  providers applied to use the funds for this purpose. Another state reserved  funds for older workers to ease the transition from JTPA to WIA and to  promote best practices for serving older workers under WIA. These states  set aside a portion of their statewide activities funds for older worker  services ranging from $47,010 in Wyoming to $931,214 in South Carolina  (see table 2). Almost all the states used these funds for job search  assistance and classroom training, and a few also provided other services  such as on-the-job training.
Fewer older workers received targeted services funded by these 10 states  than received targeted services funded by the JTPA older worker set-aside.  In program year 2000, approximately 2,000 older workers received  targeted services, representing about 5 percent of the older workers  enrolled in the WIA adult and dislocated worker programs. In program  year 1998, about 11,000 people aged 55 and older received services  funded by the JTPA older worker set-aside, representing about 29 percent  of the older worker enrollment (see fig. 5).
Four of the states we visited were among those that used WIA statewide  activities funds specifically for older workers. Arizona, Florida, and  Massachusetts used program year 2000 statewide activities funds for older  workers, while California used program year 2001 funds. For example,  Massachusetts used the funds to support case managers at a one-stop  center who specialized in serving older workers. These specialists helped  older workers find jobs and managed support groups in which older  workers could share job-search experiences with their peers. Arizona used  its statewide activities funds partly to support job-training programs  serving only older workers, such as a customer service representative  training program. The state also reserved funds to send older workers to  training programs serving workers of all ages. California used $190,853 in  program year 2001 funds and $672,450 in program year 2002 funds for a  computer skills training program for older workers. This program served  only older workers, offered a slower pace of instruction and constant  review to ensure mastery of skills, and included a job-search component.
TAA providers, like most WIA providers, include older workers in services  with younger workers. None of the states responding to our survey of state  TAA administrators said they used TAA funds in program year 2000 to  provide separate services specifically designed for older workers. As they  always have, TAA providers served older workers along with younger  workers.
During our site visits, administrators of public employment and training  programs were unable to identify private sector companies that have  established large scale training programs specifically for people aged   55 and over. As we noted in a prior GAO report, employers may feel that  it is more difficult to recoup the costs of hiring and training older workers  because of the shorter potential length of time older workers may remain  with the employer as compared with younger workers.

		SCSEP Offers Older Workers Special Services and Is Accessible through One-Stop Centers

Because SCSEP is a program exclusively for older workers, SCSEP staff  provide job search assistance and training that is tailored to meet older  worker needs. For example, SCSEP staff members in a local area in  Pennsylvania adapted their job search assistance by helping older workers  learn to address age-related questions in job interviews and advising them  to drop graduation dates from their resumes in order to deal with the age  discrimination they may face in the job market. Another SCSEP provider  in Pennsylvania incorporated physical fitness into a program that trained  older workers for physically strenuous health care jobs, such as home  health aide. A number of SCSEP providers offered computer classes that  served only older workers and introduced new material more gradually.  These providers told us that older workers who have not learned new  technologies in many years benefit from these computer classes.
In most local areas, older workers who visit the one-stop centers have  access to some of these special services through SCSEP. Seventy-eight  percent of the local areas responding to our survey said SCSEP staff was  physically present in their one-stop centers at least once a week, usually  providing direct services to older workers. In most of the local areas we  visited, older workers who visited the one-stop centers initially received  the same basic job search services available to workers of all ages. Older  workers were usually referred to on-site SCSEP staff only if they had had  no success with basic job search and other one-stop staff members  thought they could benefit from SCSEP services. At a minimum, on-site  SCSEP staff enrolled income-eligible older workers in the SCSEP  subsidized job program. In five of the one-stop centers we visited SCSEP  staff offered additional on-site services specifically for older workers, such  as job search workshops tailored to older workers, ongoing case  management to help older workers find jobs, or a job bank of positions  appropriate for older workers. These services were usually available to  older workers not enrolled in SCSEP, as well as to SCSEP participants.
In three local areas we visited, WIA and SCSEP providers coordinated  their services in ways other than cross-referral and colocation to meet the  needs of their older workers. For example, in California one SCSEP  provider received WIA funds from the local Workforce Investment Board  to operate a satellite one-stop center focused on older workers. Although  the center served visitors of all ages, it offered an array of special  programs for older workers, such as a staffing service matching older  professionals with employers and a computer skills class tailored to older  workers. In a local area in Pennsylvania, a case manager in the one-stop  centers was funded jointly by the WIA and SCSEP programs and split her  time between helping visitors of all ages and providing specific services to  older workers. Officials in the local area said this approach allowed the  case manager to make efficient use of her time, because she could serve  younger workers whenever no older workers needed assistance. Also,  because the case manager was an expert both on general workforce issues  and on older worker issues, she could determine the best service strategy  for each older worker.

	WIA Performance Measures May Affect Older Workers’ Access to Services

Employment and training providers report that, as a result of WIA’s  performance measures, they are less likely to enroll some older workers in  services such as training. Bureau of Labor Statistics and Census data  suggest that older workers have unique employment characteristics, such  as a tendency to work part time and a likelihood to take larger pay cuts  than younger workers when they re-enter the labor market. These  characteristics may negatively affect outcomes on certain performance  measures, and, as a result, administrators in over half of the local areas we  visited indicated that performance measures are a barrier to enrolling  older workers into WIA intensive services and training.
WIA’s performance measures were established to provide for greater  accountability and to demonstrate program effectiveness. These  performance measures gauge program results in such areas as job  placement, employment retention, and earnings change, as well as skill  attainment and customer satisfaction. States are held accountable by  Labor for the quality of the service they provide in these areas, as judged  by specific performance outcomes. If states fail to meet their expected  performance levels, they may suffer financial sanctions; if states meet or  exceed their levels, they may be eligible to receive additional funds. A  prior GAO report noted that the WIA performance levels are of particular  concern to state and local officials. If a state fails to meet its performance  levels for 1 year, Labor provides technical assistance, if requested. If a  state fails to meet its performance levels for 2 consecutive years, it may be  subject to up to a 5 percent reduction in its annual WIA formula grant.
Under WIA, older workers are subject to the same performance measures  as all other workers. There are a total of eight WIA employment related  performance measures that are relevant to adults—-four pertaining to  individuals enrolled in the adult program and four pertaining to individuals  enrolled in the dislocated worker program (see table 3).
The way two of these performance measures—earnings change which  compares pre- and post-WIA adult program enrollment earnings and  earnings replacement which compares pre- and post-WIA dislocated  worker enrollment earnings—are calculated may limit some older  workers’ access to more in-depth services, such as computer training. The  most favorable results to these measures occur when individuals seek full- time work and had low or no prior earnings. (See appendix IV for a  description of how these two measures are calculated.) Older workers are  more likely to work part time than younger workers. As a result, older  workers seeking part-time work as well as older workers with high prior  earnings may produce lower outcomes on performance measures as  compared to those individuals seeking full-time work or with lower prior  earnings.
Labor’s WIA outcome data for program year 2000 provides current  performance measure outcomes cumulatively for states and provides  evidence that older workers’ unique characteristics may adversely affect  program outcomes. With regard to the earnings change performance  measure outcome for those enrolled in the WIA adult program, older  workers had an increase in earnings that was approximately 35 percent  less than younger workers—$2,924 versus $4,566. Similarly, with regard to  the earnings replacement rate for those enrolled in the WIA dislocated  worker program, younger workers increased their earnings by 7 percent  whereas older workers experienced a decline in their earnings of 17  percent (see table 4).
As a result of the potential impact on program performance measure  outcomes, WIA employment and training providers may be choosing to  serve only those job seekers who are most likely to have large earnings  increases. A prior GAO report identified that the performance levels for  the measures that track earnings replacement for dislocated workers and  earnings change for adults may be especially problematic and that several  state officials reported that local staff were reluctant to register dislocated  workers with high prior earnings or already employed adults. Officials in  six of the ten local workforce areas that we visited consider performance  measures a barrier to enrolling older workers into WIA because their high  prior wages and/or their tendency to work part time negatively impact the  area’s performance. In addition, state officials in four out of the five states  that we met with concurred with this view. One state official remarked  that local workforce investment boards are struggling with the WIA  performance requirements, and are targeting their WIA training funds to  people seeking full-time jobs at certain wage levels to meet the WIA  requirements for earnings gain/replacement. The official further stated  that the WIA earnings requirements make it difficult to serve job seekers  looking for part-time work, and those who had prior full-time jobs with  high salaries.
Several state and local officials commented that performance measures  create a barrier to providing services and suggested creating a separate set  of performance measures for older workers or special populations. One of  the state officials stated that, in regards to the performance measures, it is  imperative that the vast majority of participants earn higher wages and get  full-time employment, which is at odds with serving older workers who  prefer part-time jobs. Two other local officials told us that older workers  seeking part-time work would not be enrolled in intensive services or  training because of their effect on performance measure outcomes, but  could receive core services at the one-stop centers or be referred to  another program.
Of the 230 local workforce investment boards providing written comments  on our survey, 23 specifically addressed the negative effects of the  performance measures on older workers. For example, one official stated,  “federal programs must recognize the need and desire on the part of  people 55 and older for part-time work. Performance goals discourage  serving this group.” Seven of the 10 SCSEP national grantees we contacted  also expressed a belief that WIA performance standards could be a  disincentive to enrollment of older workers.
Older workers have unique employment characteristics, such as a being  more likely to work part-time jobs and experiencing a greater decline in  earnings when re-entering the workforce, according to the 2001 Current  Population Survey and the Bureau of Labor Statistics. Older workers are  approximately 50 percent more likely than younger workers to work part  time (see table 5).
The Bureau of Labor Statistics data also show older workers who are laid  off are less likely than younger workers to become re-employed.  Furthermore, these data show that these older workers are more likely to  be re-employed part-time (see fig. 6).
Older workers who were laid off from full-time jobs between January   1999 and December 2001 also tended to experience a slightly greater loss  of earnings than younger workers upon re-employment. Specifically,  older workers replaced 89 percent of their previous median weekly  earnings on average, versus 92 percent for younger workers (see table 6).  These figures understate the impact of job loss on the income of older  workers because they only pertain to full-time work and older workers are  less likely to work full time when they are re-employed.

	Conclusions

According to some economists, the United States will face a significant  labor shortage by 2030. As the population ages, older workers could  become crucial in filling this projected shortage. Many older workers have  difficulty re-entering the workforce, and often rely on federal employment  and training programs to help them find employment. Others need these  programs to help them upgrade some skills, particularly computer skills,  so they can enter or remain in a workplace that is becoming increasingly  reliant on information technology.
Research findings have been inconsistent as to whether older workers  need special services to help them find or retain employment and  employment and training providers have taken different approaches to  providing services to older workers. Under WIA, older workers are likely  to be integrated with younger workers when receiving employment and  training services through the one-stop centers rather than receive these  services through separate targeted programs. While performance  measures are not necessarily a problem, the way that some of WIA’s  performance measures are constructed has created perverse incentives for  program administrators to exclude some older workers from receiving  more in-depth WIA services, such as training for a particular occupation or  upgrading computer skills. Consequently, some older workers, and any  other workers who share similar employment characteristics with older  workers, may not receive the more in-depth services that may be  necessary to help ensure that these workers are provided adequate  opportunities to fill the anticipated labor shortage and meet employer  needs.

	Recommendation for Executive Action

In light of concerns that older workers have unique employment  characteristics that could adversely affect certain program outcomes and  that older workers who need in-depth job search assistance and job  training to remain in, or re-enter, the workforce may not receive such  services, we recommend that the Secretary of Labor assess WIA  performance measures and make adjustments as necessary to eliminate  the disincentive to enrolling older workers in WIA.

	Agency Comments and Our Evaluation

We provided a draft of this report to Labor for review and comment. Labor  noted that it found our draft to be both informative and interesting  because the Department has a strong interest in the aging of the American  workforce and recognizes that the increasing numbers of older people will  require changes in the way older workers are thought of and treated by the  employer community. Labor generally agreed with our recommendation  and identified steps that it is taking to address it. Labor also provided  technical comments that we incorporated where appropriate. Labor’s  entire comments are reproduced in appendix V.
Although Labor acknowledged that our conclusion that some performance  measures may provide a disincentive to enrolling older workers in WIA  programs may be correct, Labor believes that such a conclusion may be  premature and noted that it is based on a limited number of comments  from project operators and Workforce Investment Boards. While we agree  that our conclusion is based on a limited number of survey responses and  interviews, we also believe that such comments raise a warning flag to  what could be a pervasive problem, and as such, should be taken into  consideration. Regarding our recommendation that Labor assess WIA  performance measures and make necessary adjustments to eliminate  disincentives to enrolling older workers in WIA programs, Labor generally  agreed, pointing out that as it assesses WIA performance measures it will  identify and eliminate factors that discourage participation of any group.  Labor also noted that it is preparing a report for the Senate Appropriations  Subcommittee on Labor, Health and Human Services, and Education that  addresses some of the same issues covered by our report. Finally, Labor  noted that it has formed a task force to review services to older workers  and to identify policies to help meet the needs of this group.
We will send copies of this report to the Honorable Elaine L. Chao,  Secretary of Labor; relevant congressional committees; and other  interested parties. Copies will be made available to others upon request. In  addition, the report will be available at no charge on the GAO Web site at  http://www.gao.gov. Please contact me on (202) 512-7215 if you or your  staff have any questions about this report. Other major contributors to this  report are listed in appendix VI.

Appendix I: Objectives, Scope, and Methodology

We were asked to determine (1) to what extent people aged 55 and over  are enrolled in federal employment and training programs and what  services they receive, (2) how employment and training services are  provided to older workers, and (3) how performance measures may have  affected services for older workers. In our review of federal employment  and training programs we focused on three programs funded by the  Department of Labor (Labor): SCSEP because it is the only Labor program  that serves exclusively older workers; WIA because it is the largest  program in terms of funding for employment and training services and  because its predecessor program, JTPA, required states to set aside funds  to provide employment and training services specifically for older  *workers; and TAA because Labor officials told us the program serves  many older workers laid off from mature manufacturing industries such as  steel making and textiles.
To conduct our review we visited 10 local areas in 5 states, meeting with  both local and state officials. We surveyed state officials responsible for  the WIA, SCSEP, and TAA programs in all 50 states, the District of  Columbia, and Puerto Rico. We also surveyed officials from all 595 local  Workforce Investment Boards nationally. We conducted phone interviews  with the ten national SCSEP grantees and interviewed officials from Labor  and from research and advocacy organizations such as AARP, Urban  Institute, and National Association of State Units on Aging. We obtained  and analyzed service and outcome data from Labor on the WIA and SCSEP  programs. Although we did not independently verify the data from the  Department of Labor we did review and take into consideration Labor’s  documents describing the quality of the WIA data. Finally, we reviewed  research studies on older workers’ employment and training needs.

	Site Visits

We selected five states for site visits according to several criteria,  including the proportion of the population that was aged 55 and older and  the amount of funds received for administering SCSEP and the WIA Adult  and Dislocated Worker programs (see table 7). We also chose some states  because we knew they had special programs or policies regarding older  workers as well as to ensure geographic diversity. In each state, we  interviewed officials responsible for administering the state’s WIA and  SCSEP programs. In some states, we also met with officials responsible  for the TAA program.
Within each state we judgmentally selected two local workforce areas to  visit—one urban and one rural area (see table 8). In each location, we  interviewed officials representing the WIA program and officials from at  least one local SCSEP program. The local SCSEP programs we met with  received funds from state SCSEP grantees and from several of the national  SCSEP grantees. In addition, in some local areas we visited one-stop  centers, met with organizations that promote local business development,  and observed job-training programs designed for older workers. Finally,  while in California we met with Experience Works, a SCSEP national  grantee that received WIA funds to operate a computer-training program  targeted to older workers.

	Surveys

We distributed three surveys to the 50 states, the District of Columbia, and  Puerto Rico, focusing on services to older workers during program year  2000 (July 1, 2000, to June 30, 2001). One survey was designed to obtain  information on how states used SCSEP funds, including their use of these  funds for training, whether they imposed time limits on host agency  assignments, and how they used 502(e) funds. We received 50 responses to  this survey (96 percent). Rhode Island did not return the SCSEP survey,  and Florida was unable to return the survey because it did not centrally  administer its SCSEP funds during program year 2000. A second survey  was designed to obtain information on how states used WIA funds to serve  older workers, including the number of older workers served, what  services they received, and whether and how states used their statewide  activities funds specifically for older workers. We received 49 responses to  this survey (94 percent). Connecticut, Delaware, and South Dakota did not  return the WIA survey. Our third survey was designed to obtain  information on how states used TAA funds to serve older workers,  including how many older workers were served and what services they  received. We received 48 responses to this survey (94 percent). Michigan,  Missouri, and South Dakota did not return the TAA survey, and Puerto  Rico did not have a TAA program.
We also distributed a survey to all 595 local Workforce Investment Boards  nationally to obtain information on how local workforce areas delivered  services to older workers during program year 2000. This survey covered  topics including special services available to older workers in the one-stop  centers, the colocation of SCSEP staff in the one-stop centers, and the  impact of the loss of older worker set-aside funds on services to older  workers. We received 470 responses to the survey (79 percent).
Finally, we conducted telephone interviews and a mail survey to obtain  information from the ten national SCSEP grantees on their services to  older workers during program year 2000. The telephone interviews with all  ten national grantees covered topics such as how job search and training  services were delivered, the use of 502(e) funds, and coordination with  WIA. All 10 national grantees returned the mail survey, which included  quantitative questions on services provided and the use of 502(e) funds.

Appendix II: SCSEP National Grantee Activity in Program Year 2000 (July 1, 2000 to June 30, 2001)

Appendix II: SCSEP National Grantee  Activity in Program Year 2000 (July 1, 2000 to  June 30, 2001)

Appendix III: SCSEP Grantees’ Use of 502(e) Funds in Program Year 2000 (July 1, 2000 to June 30, 2001)

Appendix III: SCSEP Grantees’ Use of 502(e)  Funds in Program Year 2000 (July 1, 2000 to  June 30, 2001)
According to our surveys, eight national grantees and 22 state grantees  used 502(e) funds during program year 2000 to place older workers in and  train them for private sector employment. Grantees can operate 502(e)  projects through two funding mechanisms: they can apply for funds from a  national pool of competitively awarded 502(e) funds, and they can choose  to use a portion of their regular formula funds to sponsor 502(e) projects.

Appendix IV: WIA Earnings Change and Earnings Replacement Rate Performance Measure Calculations

	Adult Measure

Measure 3: Adult Average Earnings Change in Six Months  Of those who are employed in the first quarter after exit:  Total post-program earnings (earnings in quarter 2 + quarter 3 after exit)  minus pre-program earnings (earnings in quarter 2 + quarter 3 prior to  registration) divided by the number of adults who exit during the quarter.

	Dislocated Worker Measure

Measure 7: Dislocated Worker Earnings Replacement Rate in Six Months  Of those who are employed in the first quarter after exit:  Total post-program earnings (earnings in quarter 2 + quarter 3 after exit)  divided by the pre-dislocation earnings (earnings in quarters 2 + quarter 3  prior to dislocation)

Appendix V: Comments from the Department of Labor

Appendix VI: GAO Contacts and Staff Acknowledgments

	GAO Contacts

	Staff Acknowledgments

Melissa Emrey-Arras, Laura Greene, and Lorin Obler made significant  contributions to this report, in all aspects of the work throughout the  assignment. In addition, Michael Coullahan conducted the information  gathering segment for the SCSEP national grantees, Arthur Merriam and  Joseph Evans contributed to the initial design of the assignment, Shana  Wallace and Stuart Kaufman assisted in the design of the four national  surveys, Carolyn Boyce conducted the data analysis for one of these  surveys, Roger Thomas provided legal support, and Corinna Nicolaou  assisted in the message and report development.

Related GAO Products

Workforce Investment Act: States’ Spending Is on Track, but Better  Guidance Would Improve Financial Reporting. GAO-03-239. Washington,  D.C.: November 22, 2002.
Workforce Investment Act: States and Localities Increasingly Coordinate  Services for TANF Clients, but Better Information Needed on Effective  Approaches. GAO-02-696. Washington, D.C.: July 3, 2002.
Workforce Investment Act: Coordination of TANF through One-Stops Has  Increased Despite Challenges. GAO-02-739T. Washington, D.C.: May 16,  2002.
Workforce Investment Act: Youth Provisions Promote New Service  Strategies, but Additional Guidance Would Enhance Program  Development. GAO-02-413. Washington, D.C.: April 5, 2002.
Workforce Investment Act: Coordination between TANF Programs and  One-Stop Centers Is Increasing, but Challenges Remain. GAO-02-500T.  Washington, D.C.: March 12, 2002.
Workforce Investment Act: Better Guidance and Revised Funding  Formula Would Enhance Dislocated Worker Program. GAO-02-274.  Washington, D.C.: February 11, 2002.
Workforce Investment Act: Improvements Needed in Performance  Measures to Provide a More Accurate Picture of WIA’s Effectiveness.  GAO-02-275. Washington, D.C.: February 1, 2002.
Older Workers: Demographic Trends Pose Challenges for Employers and  Workers. GAO-02-85. Washington, D.C.: November 16, 2001.
Workforce Investment Act: New Requirements Create Need for More  Guidance. GAO-02-94T. Washington, D.C.: October 4, 2001.
Workforce Investment Act: Better Guidance Needed to Address Concerns  Over New Requirements. GAO-02-72. Washington, D.C.: October 4, 2001.
Trade Adjustment Assistance: Trends, Outcomes, and Management  Issues in Dislocated Worker Programs. GAO-01-159. Washington, D.C.:  October 13, 2000.
Senior Community Service Employment: Program Reauthorization  Issues That Affect Serving Disadvantaged Seniors. GAO/T-HEHS-99-126.  Washington, D.C.: May 19, 1999.

Summary:
Why GAO Did This Study

Some economists predict that by 2030, the United States could experience a labor shortage of 35 million workers. As the shortage approaches, one option available is to encourage people to work beyond traditional retirement ages, especially because people who are age 55 or older will constitute nearly a third of the poppulation. Accordingly, increasing demands will be made on the workforce development system to help ensure that older workers are provided opportunities to help address the anticipated labor shortage. Concerned that the existing workforce development system may not meet the needs of older workers, the Subcommittee's Ranking Minority Member asked GAO to determine the extent that older workers are enrolled in federal employment and training programs, what services are provided, and how performance measures affect such services.

What GAO Found

About 12 percent of the 1.3 million older people who were not working and wanted a job were enrolled in these programs between July 2000 and June 2001. Some older workers received services without being enrolled in a program but these people were not counted in program statistics. The majority of older people enrolled received subsidized jobs through the Senior Community Service Employment Program. About one-third participated in programs funded by the Workforce Investment Act and Trade Adjustment Assistance. Most of the older workers enrolled in these programs received job search assistance, such as help in preparing for interviews and writing resumes, but some also received job training. Research findings have been inconsistent as to whether older workers have distinct learning needs, but Workforce Investment Act program providers are less likely now than in the past to have separate programs for older workers. The Workforce Investment Act requires program providers to report certain information so that Labor can determine how well programs are performing. These performance measures include how many participants find jobs and how much their earnings have increased. Program providers report that some performance measures provide a disincentive to enrolling older workers into the program because of employment characteristics that may negatively affect program performance. For example, in 6 of 10 the local areas we visited, officials said they considered performance measures a barrier to enrolling older workers seeking part-time jobs because they would have lower earnings and therefore reduce program performance. Consequently, some older workers may only receive job search assistance and not have access to in-depth services, such as computer training.