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Blog Post · April 30, 2024

Testimony: Enhancing California’s Wage Data Can Help Improve Its Economic Future

photo - Nurse in Training Checks Patient's Pulse

Sarah Bohn, PPIC vice president and director of the PPIC Economic Policy Center, testified before the Senate Select Committee on Career Technology and the New Economy on April 29, 2024. Here are her prepared remarks.

Thank you, Senator Roth and committee members, for inviting me to speak with you today. Jobs and the economy are top concerns for Californians, according to the PPIC Statewide survey. Moreover, Californians are worried about economic mobility: 71% believe that the state’s children will be worse off financially when they reach adulthood than their parents are now. While there are indeed some strong economic headwinds, California has many advantages, with its large, diverse, innovative economy. Providing Californians with the skills and training for near- and long-term job opportunities is essential to improving individual economic well-being and enhancing the ability of the state’s workforce to power our economy.

State investments in job training programs garner high levels of support in our surveys:  81% of Californians say they support increased funding for job training programs. And this view is shared across partisan, demographic, and regional lines.

To shed light on the value of new data collected through the “base wage file,” I will make a few points grounded in my experience as a researcher studying the labor market experiences of Californians. Throughout, I will draw on in-depth research that my PPIC colleagues and I have conducted using the base wage file.

Improved workforce program evaluation

I’ll start with some reflections on how workforce program evaluation could be strengthened. In 2019, we published a rigorous evaluation of career education (or “career technical education”) programs at California Community Colleges. This was possible under an MOU with the Chancellor’s Office that included access to de-identified student-level records linked to elements from the EDD base wage file.

Because community college CTE programs serve a slightly older student population with a lengthy earnings history, we were able evaluate the impact of career education credentials on earnings. We looked at changes in earnings trajectories after credential achievement, controlling for a wide range of individual-level characteristics.

We found a 20% increase in earnings for graduates relative to what they would have earned if they had not completed the CTE credential (measured as the average increase over the 6 years after earning a credential). Across programs and types of credentials (e.g., associate degree vs. long- or short-term certificates), there is considerable variation in earnings gains. Community college health programs offer the greatest earnings gains by far—nearly 70%, driven primarily by achievement of registered nursing credentials.

figure - Earning career education credentials at California Community College boosts earnings, with variation across programs

Additionally, we evaluated earnings gains for students in career education programs with “stacked” credentials. For instance, in the renewable energy field, you might start with a short-term certificate in energy tech fundamentals and continue onto a higher certificate or even associate degree in solar installation technology. We find, first, that relatively few CTE students pursue these kinds of stacked pathways; 25% of students who complete a certificate continue on to a higher level credential. However, we find that those who do pursue and complete pathways see statistically meaningful earnings gains.

We have compared the results on earnings gains for career education students to thresholds of economic well-being derived from the PPIC/Stanford California Poverty Measure. These thresholds are adjusted at the county level for cost of living and provide a sense of how CTE graduates are doing over time relative to an objective standard of economic need. We found that the majority of graduates were earning at the “middle income” level six years after they earned a credential. Again, this varies substantially by program and type of credential.

figure - The likelihood of earning middle-income wages is greatest among associate degree holders

The likelihood of earning middle-income wages is greatest among associate degree holders. These insights are, I believe, very helpful in understanding how CTE credentials relate to economic well-being. However, they don’t tell us how programs are preparing students for careers they’ve trained in or whether the investments are meeting labor market needs. I’ll highlight three ways enhanced data could address those gaps.

  • Occupation: We don’t know whether Californians who completed these programs are actually working in the occupations for which they received training. In some cases, we can glean insights from the industry data that’s available in the base wage file. For instance, nursing program graduates who are employed in hospitals are highly likely to be in a health-related occupation. But we can’t identify specific jobs. And, of course, students who complete programs in fields such as information technology or business could be employed in any number of sectors. Having access to occupations or job titles is essential for identifying whether programs are meeting intended goals and meeting labor market needs. Moreover, occupational information could allow California to see which career pathways are most advantageous.
  • Work location: I mentioned that we evaluated how graduates fared relative to regional “middle income” thresholds. However, our analysis is based on the locations of the community colleges, not work locations. Historically, community college students tend to remain in their local area after they earn credentials; this could be changing—if, for example, students take advantage of the option to do a lot of coursework remotely. Also, we know that some Californians make lengthy commutes or move for job opportunities. Data on work locations could tell us more about regional labor market needs, opportunity, and what it might take for graduates to achieve the mobility desired.
  • Hours: Quarterly earnings tell us a lot about an individual’s resources from work. However, earnings growth might come from working more hours, or growth might be muted because hours are limited. Information on the number of hours worked would allow much more specificity on outcomes.

Altogether, these types of base wage file enhancements would permit more detailed, nuanced, and accurate analyses of how graduates are faring economically and how well aligned programs are relative to evolving labor market needs. My examples have been career technical education at the community colleges, but these enhancements could translate to the wider set of workforce training programs offered in California.

Using enhanced data for better governance
I’d like to outline two additional benefits of enhancing the base wage file.

First, more-detailed data could help improve the delivery of government programs. My colleagues at PPIC recently analyzed employment dynamics among CalFresh participants. As you know, Californians qualify for food assistance when their income and assets fall below a means-test. A better understanding of the volatility of employment for this population can shed light on the amount of churn—or movement on and off the program—we might see; it could also provide a sense of how long families might need CalFresh given labor market realities, and the extent to which a safety net program like CalFresh provides the kind of stability that can support economic mobility.

Under an MOU with the California Department of Social Services, my colleagues leveraged de-identified information on CalFresh clients linked with base wage data elements. They found that most adult CalFresh recipients are working: at least 80% are working before, during, and/or after they receive CalFresh. This finding underlines a defining fact of the state’s economy: poverty in California is working poverty.

This research also found that while CalFresh does not generally affect employment volatility, participants who enroll in CalFresh after holding jobs for three months or less see some improvement after they leave the program. Lastly, quarterly earnings increase after CalFresh—more so for men than women.

These findings shed light on the challenge of stabilizing family economic needs in a labor market comprised of many low-wage, relatively volatile jobs. Base wage file data on hours and occupations, could generate a more-detailed understanding of how jobs and wage rates affect the safety net needs of low-income families.

Another PPIC team is evaluating the efficacy of California Department of Corrections and Rehabilitation programs using de-identified, linked base wage file data. The more detailed labor market outcome analysis that enhanced data would permit could inform the efficacy of those programs as well.

Second, and more generally,  data enhancements can help California meet the labor market challenges that lie ahead. Given the transitions on the horizon, from climate change and the adoption of clean energy, to AI and automation, to major demographic changes and the retirement of baby boomers, our workforce systems will need to be adaptable and accessible. While we don’t want to burden employers with data reporting requirements, we do want to ensure California has a skilled workforce that can help businesses start, grow, and thrive.

Right now, there are major gaps in our understanding of the extent to which education and training are preparing individuals and shaping the workforce overall. Closing these gaps could help the state and individual families, who are investing substantial resources in education and training. It could also help businesses looking to hire qualified graduates.

Other states and national organizations are working to enhance data collection with the aim of strengthening the link between education and opportunity. At a time when Californians are concerned about what’s ahead for them and their children, I’m encouraged by the potential to strengthen the state’s ability to shepherd successful strategies for economic growth and well-being.

Thank you for the opportunity to share this research perspective with you today.


CalFresh California Community Colleges career technical education Economic Mobility Economy Jobs and Employment labor market Poverty & Inequality safety net wages Workforce and Training