As noted above, net costs were generally higher for education-focused programs than for employment-focused programs. Similarly, HCD programs had higher net costs than LFA programs. Again, this was not a surprising finding. As discussed in Chapter 1, the HCD programs were designed to make larger upfront investments in building skills, mainly through education and training activities, which tend to be longer in duration and more expensive to operate than job search activities. It was anticipated that the programs would incur higher costs, but with the hope that this greater investment in human capital would produce greater returns (earnings increases and welfare savings) over time.
After two years of follow-up, HCD programs were 1.5 to 2.6 times more expensive than LFA programs. Although the net cost gap at the five-year point narrowed relative to net costs at the two-year point, HCD programs continued to be more expensive than LFA programs from 1.3 to 1.9 times more expensive.(10)