A Research Focus of the Urban Institute
The Urban Institute has examined jobs programs and policies since the late 1960s, through many economic cycles.
About the Issue
The unemployment rate rose steadily in 2008 and showed no signs of slowing down. Roughly 10.1 million people are out of a job, putting pressure on unemployment insurance and other government safety net programs. More layoffs are expected as the country deals with a financial crisis brought on by the subprime mortgage market collapse, which took down Fannie Mae, Freddie Mac, and blue-chip financial giants in its wake.
In this uncertain economy, low-wage workers are the most vulnerable. How can we protect these low-income families as unemployment rises and wages remain stagnant? How can we help out-of-work Americans update their skills and train for new jobs? What industries are still growing and hiring during this economic downturn?
The Urban Institute has tracked job trends for nearly 40 years, following unskilled workers during the 1990s boom, welfare leavers moving into the workforce, and displaced Gulf Coast residents who lost their jobs after Hurricane Katrina.
What's New
With a new administration coming into office in 2009, now is a critical time to rethink workforce development, especially services for disadvantaged adult and youth workers. The Workforce Investment Act (WIA), which funds job training and other labor-market services, expired in 2003 and is now operating at reduced funding levels almost every year. In “Workforce Development and the Disadvantaged: New Directions for 2009 and Beyond,” author Harry Holzer examines the strengths and weaknesses of the WIA program and offers strategies to improve the system.
Three Urban Institute papers in the “A New Safety Net for Low-Income Families” series offer policy recommendations for protecting vulnerable families with work supports and unemployment insurance.
Low-wage jobs are often characterized by uncertainty and unpredictable gaps in employment. Yet, many low-wage workers don’t have access to unemployment insurance. In “Weathering Job Loss: Unemployment Insurance,” Margaret C. Simms recommends nationwide eligibility changes to ensure that low-wage workers are not shut out of the insurance program because of short job tenure, the need to seek part-time work, or failure to meet the minimum earnings requirement. Many struggling families would be helped if workers who quit their jobs because of illness, pregnancy, family emergency, or domestic violence could still get benefits.
Low-wage workers could find more stable, secure employment if they upgraded their job skills. In “Helping Poor Working Parents Get Ahead: Federal Funds for New State Strategies and Systems,” authors Harry J. Holzer and Karin Martinson propose boosting current workforce development efforts. Putting money back into job training, where federal spending has shrunk significantly in the past 30 years, could jumpstart new state and local strategies to train low-income workers. Promising training programs include those that feature instructional accommodations for low-skilled workers, employer partnerships, financial incentives, and other supports.
Some low-income adults face significant work obstacles, whether chronic physical or mental health issues, substance abuse, domestic violence, low literacy, learning disabilities, a criminal record, limited education and work experience, or the need to care for a disabled child. Pamela Loprest and Karin Martinson, in “Supporting Work for Low-Income People with Significant Challenges,” propose federal and state policy changes to help hard-to-employ adults.
Events
A New Safety Net for Working Families: Getting the Skills and Support to Make It in Today’s Job Market (September 9, 2008)
Panelists:
- Rebecca Blank, senior fellow, Brookings Institution
- Michael Fletcher, national economics reporter, Washington Post
- Karin Martinson, UI senior research associate
- Margaret Simms, UI senior fellow, director of the Low-Income Working Families Project (moderator)
- Don Winstead, deputy secretary, Florida State Department of Children and Families
For many low-wage workers, getting and keeping higher-paying jobs requires new skills. But high tuition costs, family obligations, a low skill base, and other barriers can keep them from education and training opportunities.
How can workforce development programs help low-wage workers get better jobs? What will spur businesses to invest in worker advancement? And what is needed to prevent hard-to-employ adults from falling through the cracks?
Audio recording
Recent Findings
Low-wage workers make up a substantial share of the workforce. About one in four workers earns less than $10 an hour.
Low-income adults face several barriers to higher earnings, including a lack of basic skills, lack of access to quality jobs, and limited access to child care and transportation.
Earnings are linked to education. Only 46 percent of low-wage workers have some education beyond high school. Additional education and skills training could improve their wages.
Promising employment strategies often address multiple needs, such as linking access to work supports with skill development and asset-building strategies. Many innovative programs involve funding, expertise, and collaboration from the public and private sectors.
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Federal investment in worker training has declined dramatically, though employers are demanding more highly skilled labor.
Since 1979, real federal expenditures on workforce development programs have dropped by more than 70 percent to about $5 billion. Yet many of these programs have raised earnings for low-wage workers. New investment could allow state and local governments to adopt promising collaborative approaches to worker training.
If we don’t invest in workforce development, the country faces significant social and economic costs. Weak education and training limit what millions of American workers can earn—that means high poverty rates, low productivity, and low employment. And a lack of skilled workers may send some employers overseas to fill jobs.
Job training programs can focus on “middle-skill” jobs that require more than a high school diploma but less than a four-year degree. Nearly half of the jobs in the labor market today are “middle-skill” and demand is likely to remain strong. Employers report having trouble filling these positions, so low-skill workers with additional training have opportunities here.
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Businesses can play a role in upgrading workers’ skills and helping employees advance.
Employers that invest in education and training can also enjoy lower employee turnover, higher customer retention, higher rates of innovation, and improved financial performance. Low-income workers generally benefit the least from the training employers offer, while employees with the highest wages and most formal education receive the most workplace training.
Collaborations between employers and training providers could encourage more effective employer-based training for low-income workers. Effective programs would mix vocational training with basic skills education and the ability to connect to job advancement options.
Low-wage workers are more likely to advance in large firms and in higher-wage sectors, including construction, manufacturing, and health care. Large employers with low turnover rates generally offer more on-the-job training and opportunities for promotion and better wages and benefits than smaller employers. Temporary help agencies can help low-income workers gain access to higher-wage firms, leading to higher earnings in the future.
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Publications