In the midst of the current long economic boom, unemployment is no longer a major public concern. However, a number of Urban Institute economists point out that many jobs neither pay enough to support a family nor offer strong potential for advancement. At our First Tuesdays forum in January, several Institute experts discussed a number of key new findings on the low-wage labor market. Specifically, they looked at lower-wage occupations that offer the most "good jobs," looked at mobility patterns in selected low-wage occupations, and discussed the implications of their findings for programs that serve low wage workers and former welfare recipients. The panel included economists Demetra Smith Nightingale and Nancy Pindus of the Human Resources Policy Center at the Institute and Harry Holzer, a visiting fellow at the Institute. Robert Lerman, director of the Human Resources Center, moderated the discussion.
Full Transcript of the Session | Questions from the Audience
Highlights
Robert Lerman, Director, Human Resources Center, Urban Institute
"The unemployment rate of people with a high school degree only, adult workers with no college at all, is now down to 3.2 percent. Even for high school dropouts who are 25 and over, the unemployment rate is at 6.5 percent. So unemployment is down even for less skilled workers." Mr. Lerman looks at changing trends in the makeup of the labor force.
Harry Holzer, Visiting Fellow, Urban Institute
"We have a window of opportunity right now, where we can get less educated workers into the labor market, and get them some important work experience that may help cushion them from the blows that might occur during a recession. And I think we need to use that window of opportunity as effectively as we can right now." Mr. Holzer points out that work experience gained in a tight labor market can help many low-skilled workers overcome barriers to future employment.
Demetra Smith Nightingale, Principal Research Associate, Urban Institute
"The strong economy has helped fuel welfare reform. Nationwide the welfare caseloads are down, and in some places like Wisconsin, there are 90 percent fewer cases, families, on welfare today than there were in 1993. That's an astounding shift. By most accounts, over two-thirds of the former welfare recipients have joined the workforce; but they're joining in at the bottom end of the job market with other low-skilled workers earning typically between $6 and $7 an hour. And many are not working consistently over the course of a year." Ms. Nightingale's recent research highlights occupations that offer the most good jobs for low-skilled workers and suggests what needs to be done to attract more workers to these occupations.
Nancy Pindus, Senior Research Associate, Urban Institute
"We focused on specific industries, skills, and mobility within and across the selected industries. The industries we selected were health care, with an emphasis on long-term care, hospitality and child care." Ms. Pindus recently conducted research to see if these industries offered greater opportunities for low-skilled workers.
Robert Lerman directs the Human Resources Center at the Urban Institute. He points out that the educational mix of the labor force is changing in a surprising way:
"If you look at the adult labor force, say between 1992 and 1999, what you find is that the entry of people with high school and less education into the workforce has only been enough to offset the people with high school and less who have left the labor force. So there's almost no net increase in the supply of adult workers with a high school or less level of education. I mean, it's amazing. I was shocked by it myself, because you expect to draw in people as the business cycle matures, you expect to draw in the less educated, because the more educated have jobs in the first place. But there is this demographic phenomenon that the group that's retiring and dying off have much, much less formal education than the group entering the workforce. So in that sense the prospects are modestly encouraging.
"From my perspective, I think it's interesting to note that even in spite of a pretty weak vocational education system, and a weak apprenticeship system, we have a fair number of jobs in various skill categories that are not college oriented. And it raises the question as to whether or not we ought to be doing what a lot of other OECD countries are doing, which is strengthening vocational education, apprenticeship, skill standards, and so on to upgrade these jobs even further, and to make people who are starting out more aware of the opportunities in these fields."
Harry Holzer, a visiting fellow at the Urban Institute, is a former chief economist at the U.S. Department of Labor. He says the current economic boom will help many less skilled workers gain experience needed to offset lack of education.
"What's happened in the United States in the last 20 years is that the earnings gap between college graduates and non-college graduates has more or less doubled. And the reason is that employers are increasingly looking for a set of skills that they don't think they find among people without college diplomas. Whether those are basic cognitive skills, or problem-solving skills, or more specific vocational and job-related skills, employers aren't used to finding them in their noncollege workers, and therefore, increasingly, they look for the college diploma, even in jobs where traditionally they haven't required that, and that's going to continue to be the case for a while. It doesn't mean that that requirement is immutable. It doesn't mean that people without that can't get some of those good jobs, but increasingly that's the first thing employers look for. That will continue to be the case.
"(But), the great tightness of the labor market that we're now experiencing often causes employers to forego what I would call nonessential hiring criteria, nonessential preferences. For instance, employers in less tight labor markets might often ask workers to have some experience in the line of work, but now they may not be able to afford that luxury. They may have to loosen their usual requirement of some earlier experience, or maybe of even having a college diploma or a high school diploma. Employers may have to reduce their discriminatory preferences for and against workers of certain ethnic types because when they can't find their most preferred ethnic group or gender, sometimes they fall back on other groups. And historically the periods of time in which minorities have made the most progress in American labor markets, such as in World War II, or in the late '60s, are exactly these very tight time periods when employers have to reach out beyond their usual pools to find workers, and that's going on right now."
Demetra Smith Nightingale, a Principal Research Associate at the Urban Institute, has conducted extensive research on the availability of good jobs for low-skilled workers. She defines these as jobs that pay enough and are steady enough to support a family.
"In the postsecondary training category, the good jobs we identified include auto and aircraft mechanics, data processing equipment repairers, and broadcast technicians. In the category where related work experience alone is likely to qualify one for the job, the good jobs include various low- and mid-level managers and supervisory positions, for example, in sales, marketing, and clerical support. For those who have moderate- or longer-term on-the-job training, there are many mechanic and repair jobs, several building trade occupations, a major growth area with corrections officers nationwide, insurance adjusters and investigators, and a new occupation: desktop publishing specialists. So, again, in building trade, construction, and in some of the mechanical and repair operative positions, there are jobs.
"This occupational analysis suggests a few implications for programs that are serving low-skilled workers and not just welfare recipients. First, it was striking to us that so many of the good jobs seem to be in occupations where women have not typically worked: machine and equipment installers, truck drivers, and the like. This is certainly good news for low skilled men, particularly noncustodial fathers of welfare children, which is a new high-priority target group in welfare reform. But it doesn't bode well for women in traditionally female occupations.
"So women who are interested in such nontraditional jobs should be strongly encouraged to pursue them, and we might want to think of ways to restructure those jobs to make them more appealing and attractive to women, since it's these nontraditional jobs that seem to provide the clearest opportunity for wage advancement for those persons without college.
"Second, there appear to be many opportunities for career advancement from low-wage, low-skilled entry occupations into supervisory or management jobs. And these clusters of occupations can actually cut across several industries, which should open up opportunities that cut across industrial sectors.
"And third, there seem to be a number of inspection-type jobs that provide fairly good wage potential, such as brokerage clerk and insurance adjuster. No higher education is required, but presumably, here again, there will be selection factors that enter into the hiring process, possibly including a test of reading or math and writing.
"None of what I've said here, though, means that there are plenty of good jobs to go around. Quite the contrary, the median earnings for workers without college are still low, hovering around 150 percent of poverty for a family of three."
Nancy Pindus, a Senior Research Associate at the Urban Institute, recently conducted research on job opportunities for low-skilled workers in the health care, hospitality, and child care industries.
"Our original thought was that we saw cross-industry worker mobility as a plausible means of advancement because there were common skills across industries, and common employers across these industries. These three industries are within the service sector of the economy. The jobs generally require attention to customer satisfaction, a desire to help people, and good interpersonal skills. New types of long-term care setting, such as assisted living facilities, are bridging the gap between nursing homes and hotels. In fact, major employers in the hospitality industry, such as Marriott and Hyatt, are expanding in the assisted living market. So, theoretically, workers that are trained with a core set of skills that could be applied to a number of these settings would be at an advantage in the future labor market.
"In the area of cross-industry mobility, we were somewhat disappointed in finding limited evidence of mobility between the three focused industries. We really thought there would be more crossover between the three. But across all industries, less than 4 percent of the workforce moved into a new industry each month as compared to an average of 2-1/2 percent of workers in these three focused industries.
"In the focus groups, the workers reported that their choice of industry was related to their preference for the job content or working with a certain population-such as, they enjoyed working with children-and simply the availability of jobs at the time that they were seeking employment. While the workers perceived similarities in some of the people skills across these jobs, there was really rarely any consideration in seeking new job opportunities and career moves based on those common skills. Wages were an important consideration, though. We've found that marginal changes in hourly wages were often the primary motivator for taking a similar job with another employer. Sometimes as little as 5 or 10 cents an hour increase in pay would motivate a worker to change jobs. And employers are just beginning to think about the common skills across industry, and cross industry mobility.
"In terms of industry structure and characteristics, we found that the three industries really were quite different from each other, which results in differences in their opportunities and their prerequisites for advancement. The hospitality industry offers the most opportunity for advancement for those with limited formal education. The highest earnings potential exists in the healthcare industry, but advanced education requirements are necessary. Child care is striking for the low returns to investment in education and the lack of employer-sponsored health insurance."
Questions from the Audience
Margaret Patterson, Washington office of the Port Authority of New York
"Have you seen any impact on the number or type of jobs because of the advent of e-commerce?"
MR. HOLZER: "I think it's too early to know. I have the sense that the e-commerce—the volume of e-commerce has risen dramatically only in the last 12-month period. So that's really too late to show up in any of the Bureau of Labor Statistics projections or any of the BLS data on recent trends. It's just too early to tell how much that will be changed by this, I think."
Kelleen Kaye, Department of Health and Human Services
"I just wanted to say that while I think a lot of the numbers that are presented here are really encouraging, it's also important to point out that this is just the demand side of the story, and that it's important to keep in mind the labor side, the labor supply as well. And even if there are quite a few positions that maybe don't require a college degree or formalized training, if someone without those credentials is competing with a lot of other people who have them, they're still going to lose out. So it seems that it's important to keep that in mind: maybe during a tight labor market there's enough jobs for everybody, but once it gets a little more slack I think that could be an issue, as well."
Marilyn Zuckerman, the National Policy Association
"In analyzing the jobs and coming up with the good jobs, Demetra, in your work, particularly related to the wages, what percentage of those jobs are in industries that have high union representation, and are there any conclusions about the impact of unionization on wages and better jobs?"
MS. NIGHTINGALE: "I don't have a hard answer for that. The construction trades, transportation, and manufacturing—those are the industries that have higher unionization rates today. So I would assume, hypothesize, that a lot of good jobs are in sectors with high unionization rates."
Jim Hoben, Department of Housing and Urban Development
"Could you comment on that remaining 4.1 percent of the population, and what is needed to qualify them for jobs? I would pose that as an absolute national priority if we're also going to avoid this issue of fairly soon seeing major wage inflation, at least in the lower middle ranks of income."
MS. NIGHTINGALE: "We (currently) have an opportunity to actually help that population, whereas normally, in a normal labor market, we don't. A number of the welfare-to-work grants programs are targeting the homeless, the multiple-disability families. And in many cases, it really is a supported work environment developing in conjunction with a business or an industry link that seems most promising. You see a lot of partnering with Goodwill Industries and with vocational rehabilitation and workforce development programs, cooperating in ways that we have not seen before."
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