Frontiers of Entrepreneurship Research, 1995

Frontiers of Entrepreneurship Research
1995 Edition


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    FRONTIERS OF ENTREPRENEURSHIP RESEARCH 1995.


    THE IMPACT OF ENTREPRENEURIAL TRAINING PROGRAMS ON TRANSITIONING WORKERS: THE PUBLIC POLICY IMPLICATIONS

    Stuart R. Monroe, Metropolitan State College of Denver

    Kathleen R. Allen, University of Southern California

    Courtney Price, Metropolitan State College of Denver

    ABSTRACT

    Solutions proposed to assist displaced workers and welfare recipients have almost universally excluded entrepreneurial training. Consequently, there have been few longitudinal studies to determine the impact of these training programs on self-employment through new ventures. This study examines the impact of such entrepreneurial training programs on transitioning workers and the implications for public policy initiatives.

    INTRODUCTION

    Labor market fluctuations resulting in workers being laid off have been a common characteristic of the U.S. economy even in the healthiest of economic times. In general, these workers experienced only temporary job loss and were relatively quickly able to find equivalent jobs in growing firms. This scenario is no longer the case, however. In recent years, structural changes in the economy - the permanent downsizing of corporate America, the technology revolution, and global competition - have completely altered the nature of these transitions. There are also cases where public policy has resulted in worker dislocation (i.e. NAFTA, military base closures, etc.). Today, more often than not, workers are displaced from jobs that will cease to exist. The skills that kept them employed for many years are often obsolete, and they are earning significantly less in their new jobs.

    Another category of people who are not currently participating in the labor force is welfare recipients. These "unemployed" have also been the target of government funded programs to assist in re-employment, principally because the number of Americans on welfare has increased by 460 percent over the past 30 years (O'Neill, J., 1993). The policy implications of increased social and monetary costs resulting from long-term dependence on the welfare system are enormous.

    As a result of these significant changes in labor dynamics, public policy makers have looked to training programs, outplacement, and job assistance to assist displaced workers and welfare recipients. Most of these programs, however, are geared toward job replacement as the only option. Their solutions have almost universally excluded entrepreneurial training. Consequently, there have been few longitudinal studies to determine the importance of these training programs on self employment through new ventures. This study examines a relatively new option of self-employment training and attempts to measure the degree of success this type of training has in returning workers to economic self-sufficiency. It also considers the implications for public policy initiatives.

    REVIEW OF RELEVANT LITERATURE

    The relevant literature will be discussed in two parts: a brief review of the problem and its attendant costs, and a more in-depth discussion of training solutions.

    The Problem

    The fundamental change in labor dynamics has produced outcomes that have not previously been experienced in the nation's economy ( Reich, 1993).

  • More than three out of every four job losers since 1990 are permanent losses. This is the highest rate since 1967.

  • The duration of unemployment has grown from 11 percent of the unemployed out of work more than 6 months to 21 percent.

  • Between 1984 and 1989, on average, 1.8 million workers were displaced annually. That number has increased to 2.2 million 1990 (CBO, 1993). Between 1987 and 1992 alone, the number of displaced workers was 5.6 million (Bureau of Labor Statistics, Current Population Survey, 1993).

  • More than half of displaced workers were still unemployed after one year or in jobs paying less than 80 percent of former wages. (U.S. Dept. Labor, 1993).

  • Workers who left or were laid off from full-time jobs between 1990 and 1992 experienced an average decline in wages of 23 percent in new full-time work (Census Bureau Report, 1993).

  • New jobs are inherently inferior to those they replaced.

    For displaced workers the CPS study (1993) found that workers in the youngest segment, 20-25, were as likely to be displaced as those 55 and older. Hispanic workers were displaced more often than other ethnic groups, and men were 11/2 times more likely to be displaced than women, principally because of their prevalence in manufacturing and construction where layoffs were the highest. When considering occupations, the greatest risk for displacement in the period 1990-1992 was among executives and management, technicians, mechanics and construction workers, although the highest proportion of displaced workers was in blue collar occupations (Gardner, 1993). The easiest transition for displaced workers is to a job in the same industry, but over half of displaced workers in 1992 found jobs in different industries.

    The Costs

    There are many costs associated with worker displacement - costs to the worker, to the government, to the community, and to the economy in general. For workers the measurable costs include the loss of pay during lengthy joblessness and reduced earnings in a new job. The consequences of these losses are often reflected in the community in the form of defaults on mortgages and other types of loans and credit. The extent and duration of these costs, however, is a matter of some dispute, with one end of the spectrum seeing workers recovering quickly, while the other seeing displacement as a life changing event.

    The gap in earnings after displacement can be attributed to many factors:

    1. Union-collective bargaining agreements that force wages up for union jobs.

    2. Workers having specialized skills that are not valued as highly in the new job.

    3. Productivity that depends on pay or premiums.

    4. Employment practices that preclude lateral entry such as promoting from within.

    5. Part-time jobs that don't provide benefits.

    6. Entry level positions after retraining usually resulting in a lower salary range.

    Jacobsen et al. (1994) did an extensive review of studies on the effects of dislocation on earnings and re-employment concluding that substantial earnings losses derive from displacement, especially during the first two years. They also studied the magnitude of earnings losses and the length of loss. Using longitudinal state administration data from Pennsylvania, they found that workers who had long tenures in their positions experienced substantial earnings losses after separation and even during the three years before separation. These findings are supported by a series of studies by the Bureau of Labor statistics (1993) from 1979-1990, which found that U.S. workers displaced by trade policies were more likely to move into lower paying jobs.

    Costs to the government of worker dislocation include increased unemployment insurance payments, increased distribution of food stamps and other benefits, and reduced tax revenues. By the end of the 1980s, approximately 7 percent of workers who had exhausted their UI benefits received AFDC (Corson & Dynarski, 1990). For the economy, worker displacement means decreased economic output due to workers being either unemployed, underemployed, or in welfare transition.

    Displaced Workers

    Dealing with worker displacement at a public policy level means looking at labor market transitions from a new perspective. Under the old perspective, job loss was assumed to be temporary, with job searches being short and ultimately successful. Consequently, the public policy response was unemployment insurance and various other benefits to bridge the gap. A few programs focused on job losses in specific categories and short-term training. But these job training programs were generally not effective because they did not result in new jobs for dislocated workers.

    The new perspective on labor market transitions says that most of those who lose their jobs will never get them back, and jobs acquired after displacement will generally pay less than the worker's original job. Therefore, the responses to the problem must supplement unemployment assistance with reemployment assistance and long-term training in new skills demanded by a high technology, information-driven economy.

    Existing programs like the Economic Dislocation and Worker Adjustment Assistance Act, which includes job search assistance, counseling and training, and special provisions of the Pell Grant program to provide postsecondary educational assistance, only benefit a small fraction of the growing displaced worker population. The ability of federally sponsored training programs to reduce long-term losses is grim (Leigh, 1990). The Leigh study concluded that "there is no clear evidence that either classroom training or on-the-job training has a significant impact on employment or earnings. In fact, training rarely increases annual earnings by even $1,000. The Jacobson study (1994) suggests that job search assistance has a higher rate of return than training and the cost is much less. It also tends to reach more workers.

    Most U.S. job training or displaced worker programs are performance based, making final payment to program coordinators contingent on 75 percent of the graduates being placed in full time jobs with 90 percent of those jobs being training related. Furthermore, trainees must also be on the job at least 30 days and be making wages above the required minimum. As a result, trainers in job performance contracts have an incentive to structure the curriculum to match the skills required in the marketplace and to find trainees that can master the curriculum quickly and successfully.

    Performance-based contracting does have some negatives, however, principal among them the fact that meeting the contract objectives becomes the central goal to continue to receive funding. This has ramifications for trainee selection. Often candidates are selected who are essentially job ready in the first place.

    Leigh (1992) concluded that:

    Adult training should be independent of the education system.
    Training programs should offer links to employers and be job relevant.
    Training providers must be accountable.
    The intervention should provide permanent results.
    Training should recognize that not all displaced workers require training.

    Welfare Recipients

    Government programs, designed to reduce welfare dependency, have largely consisted of work and training programs with the goal of increasing skills. However, for the most part, these programs have not succeeded in significantly reducing welfare participation. A number of states have implemented job placement programs rather than training and education. These programs lead to government subsidized jobs for a specific period of time after which the participant may be hired on permanently by the company. Manpower Demonstration Research looked at these types of programs in six counties in California over a two year period and found that the average earnings for those placed in jobs increased by 20 percent, while at the same time welfare rolls declined by five percent (Silverstein, K. 1994). Other research has found, however, that while training programs seem to increase the rate of employment and the level of earnings of welfare recipients enough to offset the cost of the training programs, the benefits of the programs themselves are too small to reduce substantially the level of dependency on welfare programs. (Burtless, G. 1992).

    The Minority Single Parent Demonstrations tested the efficacy of employment programs for welfare recipients. They were undertaken between 1982 and 1988 at four sites: Atlanta, San Jose, Providence and Washington DC. The demonstrations provided a wide range of assistance including employment training and basic skills. The San Jose group - the only group to mix basic skills and job training - was the sole group to show significant gains in the labor market, with a 27 percent increase in employment and a 47 percent increase in earnings as compared to the control group (Jacobson, 1994).

    Self-Employment Training

    One finding is clear from the review of the relevant literature: previous job training programs and government subsidies and benefits don't typically consider self-employment training as an alternative for displaced workers. Only recently have such programs begun to emerge. Consequently, longitudinal studies are not yet available. From September 1989 through March 1991, the first federally sponsored self-employment demonstration program was conducted as the Washington State Self-Employment and Enterprise Development (SEED) Demonstration at six sites throughout the state. A subsequent study was conducted in Massachusetts during the period from 1990 to 1993. Their joint purpose was to determine the feasibility of self-employment training as a reemployment option. Secondary objectives were to see if the programs accelerated reemployment, increased business startups, increased the duration of self-employment, and increased earnings.

    The treatment groups in Washington were given business startup training, counseling, a waiver of UI work search requirements, and periodic payments equal to their regular UI benefits. The control group received regular UI benefits. After 21 months, the treatment group increased the likelihood of being self employed by 25 percent, accelerated entry into self employment by six months, and increased earnings over the period of about $3,000. It should be noted that the Washington economy at the time was strong and the participants tended to be older, educated, and typically in professional, managerial, and technical occupations. Approximately 60 percent of participants in the treatment group achieved the required milestones (i.e. business plan, bank account, licenses, and financing). One negative was that training did not affect the survival rate. In both treatment and control groups, approximately one third of businesses failed. Researchers were also able to determine that business startups increased, gross business income increased, and state sales taxes and business taxes were higher for the treatment group. In the 21 month period, SEED created 49 net new jobs for people not in the program.

    The treatment groups in the Massachusetts study received essentially the same benefits as those in Washington with some variations. However, at the time of the study, Massachusetts was experiencing a severe recession. The results of a comparative study of the two demonstrations indicates that the project reduced the duration of unemployment and the receipt of benefits, increased earnings, and increased the likelihood of self-employment and job creation. In Washington, 52 percent of participants became self-employed while only 27 percent of those in the control group did. After one year, 63 percent of those who started a business were still in business. In Massachusetts, 47 percent of participants became self-employed, compared to 29 percent of those in the control group. These demonstrations clearly support the contention that self-employment programs such as these are feasible for UI recipients and are consistent with results achieved in programs in Great Britain and France (Dept. of Labor, 1994).

    FLITE is a three year demonstration program funded by the Department of Health and Human Services and conducted in five northern counties of Idaho. It is a six month training program for low income individuals wishing to start businesses. The program focuses on the unemployed, those in public housing or receiving AFDC, or those who are homeless. It consists of 16 weeks of group training, individual counseling, business startup loans, networking and referrals. Of the 79 participants in the 1993 and 1994 classes, 33 became involved in their own small businesses after having completed some or all of the program components. Twenty-one participants completed all components of the program. This program is part of the follow-up study reported in this research.

    A 1993 study of women and minority business owners who participated in the Premier FastTrac Entrepreneurial Training Program in Colorado (Price & Monroe, 1993) was able to show a 33 percent increase in aggregate gross sales after entrepreneurial training. This was significantly higher than in the control groups and represents the best empirical link between training and performance.

    Other studies (Robinson & Sexton, 1994) have found that higher levels of education increased the probability of becoming self employed. While they were not able to differentiate the effect of formal education versus entrepreneurial education or training on the probability of self employment, they were able to conclude that as education becomes more focused on self-employment issues (ie. entrepreneurial training) the probability of self employment increases.

    METHODOLOGY

    Four training sites were selected for this research from target groups of displaced workers and welfare transitioning recipients who graduated from Premier FastTrac I and II entrepreneurial training programs.

    Displaced Workers

    The Rock Springs, WY program consisted of 28 Black Butte miners who lost their jobs in 1992 because the mine lost its contract with a major power plant. Almost half of its workforce was laid off. The FastTrac II training program was 100 percent employer-funded and offered to interested ex-employees. Within a year the mine acquired other contracts and many of the displaced workers were re-hired, most at a lower wage rate than previously earned.

    The second group consisted of 34 ex-employees from Allied Signal and Marion Merrill Dow in the Kansas City, Missouri area who attended a 1993 FastTrac II program. This group represented both blue collar and white collar workers. White collar ex-employees were more than 75% white males with very high skill levels of formal education and job training. Most participants had numerous years of service and were strikingly different from the Black Butte mine workers.

    Welfare Transitioning Workers

    The first FastTrac welfare transitioning workers study group consisted of forty-one participants from two groups at Hayden and Sandpoint, Idaho who were in the second class of a three year FLITE demonstration project previously cited. Participants came from the hard core welfare population, all low income, many unemployed, residing in public housing, or homeless, and all receiving government assistance. Participants were selected based on a seven page application form and almost all applicants were admitted into the FLITE program

    The second group of welfare recipients consisted of 23 First Step Fund program participants from the Kansas City, Missouri area. Participants were selected from a similar seven page application form to that used in the FLITE program. Approximately 80% of the applicants were accepted in the program. Peer lending groups were formed and participants were eligible to access a micro loan pool. Graduates meet monthly to discuss business problems and provide encouragement. This bonding activity was mentioned in several interviews as being a very positive part of their business and personal life.

    Data Collection

    The five to seven page application form provided extensive data on the participant demographics, employment history, government payments, etc. An annual follow-up questionnaire was used to collect data on the current status of participants, their plans to start a business, hours per week worked, performance of their business since inception (annual gross sales, part-time and full-time employees and profitability), government payment history since FastTrac training, and additional education since FastTrac. The questionnaires were completed by telephone interviews. Mail follow-ups (forwarding requested) were sent to those who were not accessible by phone; however, those responses were not included in this study due to time constraints.

    Data Analysis

    Statistical non-parametric methods in the SPSS statistical package were used to analyze the data. The problems of program self-selection, multi-site program comparisons, pooling of data, and control group anchoring were carefully addressed for programs within the same training area and among the regional training areas. Although the sample sizes were relatively small, statistical corrections allowed for a robust analysis of the results. The lack of parallel control groups for each of the study programs was addressed through comparison with other reported training program results for displaced workers and welfare transition workers.

    RESULTS

    Results for Displaced Workers

    The Black Butte Mine (BBM) study group consisted of 24 husband and wife teams and 2 females and 2 males. All of the participants were white except for one female Hispanic wife. The education levels of the participants ranged from an 8th grade education to a masters degree. Six participants had bachelors degrees and three had post graduate work. Three of the participants had previously owned businesses and one currently owned a business.

    From the Black Butte mine FT graduates, 2 of the 18 contacted (11%) were currently in business. Three additional start-up founders were unable to make their businesses successful in the small town (60% failure rate) and went back to work at the mine at reduced wages or took a job out of state. Since the mine re-employed many of the graduates within a year of termination, motivation to make their businesses successful died. One of the surviving businesses was very successful and reported over $100,000 in gross sales during 1994 with 3 part-time employees in addition to the full-time owner. The 1995 gross sales projections for this business were estimated to increase by about 50%. The second business reported less than $25,000 in gross sales in 1994 and estimated the same volume for 1995. The owner is the only employee. His spouse works full time and provides most of the family income.

    The Allied Signal/Marion, Merrill, Dow (AS/MMD) FastTrac II program in Kansas City represented a different group of displaced workers. The participation included 9 family groups (husband/wife, father/son) for a total of 34 separate family registrants- 26 males, 8 females- all of whom were white except for one African American male. Of the 34 participants 21 (70%) were in business after training and 11 (37%) were in business on a part-time basis or with a spouse running the business before taking the program. Four of the graduates had moved with no forwarding address. The instructor was Courtney Price, co-founder of FastTrac and a seasoned instructor. Regardless of the outcome of their business enterprise, strong positive support for the course was universal.

    The results for the AS/MMD group varied dramatically from the Black Butte Mine group. The FastTrac training program (AS/MMD) generated 10 new businesses. Of these 10 new businesses, 2 were closed down because the owner found alternative employment. One of these two businesses was rapidly growing, was profitable, and was subsequently sold because it became too much work compared with alternative employment for the near retirement owner.

    One year after the FastTrac training program, 8 of the 10 (80%) new start-up ventures were successful. Of the 8 new businesses, 4 generated 95% of the growth in gross sales and 100% of the growth in employment. Gross sales for these 8 new businesses increased from $408,000 to $1,298,000 (218%) from December 1993 through December, 1994. Full-time employment grew from 12 to 23 (92%) over the same period.

    Of the 7 businesses surveyed that were in existence before the FastTrac training, 2 experienced significantly increased growth rates. Aggregated gross sales increased from $95,000 to $120,000 (26%) from 1993 to 1994, the year following training. Full-time employment in these business increased from 7 to 9 (28%) over this same period.

    Almost all of the growth in sales and employment was generated by the new start-up businesses. This can be attributed to low motivation to change as was expressed in the interviews. Existing business owners were not motivated to grow as a result of the training.

    Results for Welfare Transitioning Workers

    The 1993 FLITE program had 21 participants in Hayden, Idaho. Of these, 5 graduates moved leaving 16 respondents. Of the 16 graduates interviewed, 13 have not yet started a business. Three of the participants started small businesses and reported less than $10,000 per year in gross sales. These ventures were sole proprietorships with only one employee. Of particular note was the fact that all three business owners were still receiving welfare payments at the same level as before the training.

    Twenty graduates in the FLITE program from Sandpoint, Idaho (75 miles north of Hayden) had similar results. Of the original group, 8 graduates moved leaving 12 respondents. Of these respondents, 6 did start a business. Of the 6 who started businesses, 4 were on welfare before FastTrac and 2 were on welfare after their training, using the business as a supplement to their welfare payments. All but one of the businesses reported less than $10,000 in gross sales. One notable exception was a white male who started a successful shoe repair and custom boot manufacturing business. The first year gross sales for this business was $25,000 and projected to be $35,000 in the second year of operation.

    Pooling of the data for Sandpoint and Hayden was considered statistically acceptable since the instructor was the same for both groups. The programs were offered during the same period of time, and the only apparent difference was the distance between the two towns. From the combined 41 participants, 13 had moved (32%) after one year. Of the remaining 28 participants contacted, 19 (68%) did not use the training to start their own business. Of the 9 (32%) who did start a business, 7 were receiving welfare payments before FastTrac training and 4 (44%) were still receiving welfare payments (at the same level) and supplementing their income through a small business. One participant was relatively successful as previously noted.

    It should be noted that none of the participants in the above pool had qualified for a micro loan as of the time of this study. Five of the participants had made applications but were unable to qualify, even under the less stringent loan policies of the FLITE program. The FLITE loan officer was continuing to work with these individuals to assist in meeting loan qualifications. There were four members of the previous class a year earlier who qualified for a loans. These individuals are currently active in running their own business and have not missed a monthly payment for more than two years.

    First Step Fund

    The First Step Fund program, which is a grass-roots, micro-enterprise loan program for both Missouri and Kansas residents, consisted of 16 African Americans - 14 female and 2 males - an Hispanic female and 6 white females. Of the 23 graduates, 8 had moved or did not provide phone numbers at graduation. Of the remaining 15 participants, 4 had answering machines and did not return calls while 5 did not answer their phone after four tries at different times of the day. Of the six who did respond, 2 were not in business and 4 were in business. Three of the 4 businesses were full time with only one employee. The other business was part-time with the owner spending less than 10 hours per week. All of the businesses reported gross sales under $10,000 per year. Of the six respondents, one was receiving welfare before FastTrac and two were receiving welfare after. Of the 4 in business, only one was receiving welfare and the amount was the same before and after training.

    CONCLUSIONS

    Displaced Workers

    The stark comparison between the Black Butte mine displaced workers and the AS/MMD displaced workers provided valuable information relative to the success of entrepreneurial training programs. It was obvious that displaced workers who, with significant prior education, training, and experience in a variety of business activities had a much higher success rate.

    The motivation for the displaced workers to find alternative employment is another factor in determining the success of the training programs. Those displaced workers who can find alternative employment with another company are less likely to pursue and be successful in their own business. The risk, heavy work load, stress and rewards from self employment are not for everyone. Entrepreneurial training programs increase the knowledge and confidence level of prospective business owners. But, training appears to be less successful with individuals who want to work for an employer. This analysis supports the notion that the selection criteria and orientation process for acceptance into training programs is critical to the success of the participants.

    Welfare Transitioning Workers

    The results of the research and follow-up interviews clearly indicate that welfare recipients are difficult to transition into starting new businesses and subsequent removal from government assistance. They are not strongly motivated to change their dependence on government assistance programs. Historically, long term low income families tend to institutionalize the government assistance programs. Of those who were willing to start a new business, only a few were successful at progressing to a point of self-sufficiency one year after graduation. This suggests that assessment needs to occur after a longer period of time. We suggest three to five years. Of particular importance is the entrepreneurial spirit of some participants in actually starting a small business to supplement their welfare income rather than replace it. This has profound public policy implications.

    Heavy intervention and counseling given to participants, (as occurred in the Idaho programs), does not appear to significantly change the business outcomes of this group. The personal and business counseling, business mentoring, and availability of micro loans does provide some motivation to complete the training program. It does not appear to impact the individual's attitude for success in business. This conclusion is drawn from more than 30 personal interviews by the researcher. During the interviews, 7 individuals indicated that they withdrew from the training programs once they learned that they would have to qualify for a loan and there was not any free money available after graduation. Others expressed a feeling of being mislead about the purpose of the training program and that they were not really interested in working in their own business.

    Note above the large difference in the gender and ethnicity distribution between the FLITE, principally white, and the First Step program, principally minority. Nevertheless, success rates were very similar, so it appears that gender and ethnicity were not a significant factor in this group.

    On the positive side for welfare recipients is the fact that even a few successes have long-term positive impacts on low income families. Because of the significant cost of maintaining a family on public assistance, a few successful participants easily justify the cost of the training program.

    However, the selection criteria and orientation process for entrepreneurship training programs must be carefully evaluated for this group. Selection of "high potential" individuals impacts success rates for participants. Also, proposed termination of all welfare benefits after five years would dramatically change alternatives available to these groups and enhance motivation to start a new business.

    IMPLICATIONS

    Public policy and funding of "social welfare" programs continue to come under close scrutiny in an effort to make the federal government more fiscally responsible. A fiscally conservative attitude, pervasive at all levels of government, results in policies and constraints that in many cases actually displace workers. This responsibility has also necessitated the search for successfully implemented training programs that create jobs and help solve existing and future problems of displaced workers and welfare recipients. It is now clear that significant new job creation will be necessary to meet the demand from transitioning workers, including those who, under a reformed welfare system, will need to seek employment before their assistance ends. Job creation is at the heart of entrepreneurial training. Recent studies indicate that entrepreneurial training increases the likelihood of employment, especially where enrichment through mentoring and personal counseling is offered. Public policy makers should consider entrepreneurial training and start-up assistance as a viable alternative to job assistance and retraining.

    From our research, the following public policy recommendations can be made.

    1) Policy makers and government officials should fund entrepreneurial training programs for welfare recipients in addition to other more traditional programs such as job assistance and retraining. However, to increase the effects of the program, they should restrict how long a recipient can qualify for welfare payments.

    2) Entrepreneurial training programs targeted to welfare recipients should:

    a) Include specific selection criteria which will identify those highly motivated to start a new business as evidenced by receiving welfare for a relatively short period of time, obtaining some type of skills training, and education.

    b) Include a thorough orientation program that explains what the training program will cover, the requirements, the costs, and the outcomes. The participants should respond positively when asked about their desire to start a new business after receiving the comprehensive orientation.

    c) Require that participants pay at least a token tuition to defray the cost of the training.

    d) Have participants sign a nonbinding contract which states they are committed to complete the training program, attend all sessions, read all assignments, and write a feasibility plan.

    e) Use a tested, well-designed, training program with detailed curriculum including specially designed books and supporting materials.

    f) Provide a comprehensive training program for instructors.

    g) Provide for mid-course and end-of-course evaluation of the effectiveness of the training program.

    h) Track participants for five years.

    i) Provide access to a loan pool.

    This research indicates that if these recommendations are followed, between 60 and 75 percent of the participants will complete the training program. In addition, between 25 and 30 percent of those completing the program will start new businesses within 3 to 5 years. The research further indicates that these start-up businesses will be relatively small and need considerable nurturing to grow more rapidly.

    These same recommendations also apply to companies that are downsizing. They should also offer entrepreneurial training to their displaced workers as an alternative to providing retraining and outplacement assistance. Such training programs should have the same elements as described above.

    REFERENCES

    Bureau of Labor Statistics, Current Population Survey, 1993.

    Burtless, G. (1992). When work doesn't work: employment programs for welfare recipients. Brookings Review, Vol. 10, Iss. 2, p. 26-29.

    Corson, W. & Dynarski, M. (Sept. 1990). A study of unemployment insurance recipients and exhaustees: Findings from a national survey, a Mathematica study for the U.S. Department of Labor.

    Gardner, J.M. (1993). Recession swells count of displaced workers. U.S. Department of Labor, Bureau of Labor Statistics, Bulletin 2427.

    Greenberg, D.; Meyer, R.H.; Wiseman, M. (1994). Multistate employment and training program evaluations: a tale of three studies. Industrial and labor relations review, 47, N4.

    Hearing before the Employment, Housing, and Aviation Sub-committee. (Nov. 10, 1993) NAFTA: A negative impact on blue collar, minority, and female employees.

    Jacobson, L; LaLonde, R.; Sullivan, S. (1993). The costs of worker dislocation. Michigan: W.E. Upjohn Institute for Employment Research.

    Leigh, D.E. (Aug, 1992). Retraining displaced workers: What can developing countries learn from OECD nations? Policy Research Working Papers. Population and Human Resources Department, The World Bank. WPS 946.

    Price, C. & Monroe, S. (1993). Educational training for women and minority entrepreneurs positively impacts venture growth and development. Paper presented at the Babson Entrepreneurship Research Conference, Houston, Texas.

    O'Neill, J. (1993). Can work and training programs reform welfare? Journal of Labor Research, Vol. 14 Iss: 3, p. 265-281.

    Silverstein, K. (1994). Will the feds sit out welfare reform? American City & County, Vol. 109, Iss. 3., p. 14.


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