Have you heard the latest news about the job market? Employers are hiring and unemployment is going down!
- Over the past year, Minnesota employers have added more than 63,000 people to their payrolls.
- Minnesota’s unemployment rate dropped from 5.7% in August 2012 to 5.1% this August.
- Also in August, the state’s job market surpassed its pre-recession peak, adding over 12,000 jobs for the month.
Except, these new jobs aren’t as good as the ones we lost in the Great Recession.
- Employment in the good-paying sectors of manufacturing and construction remain well below their pre-recession peaks, while many new openings are in low paying fields such as retail and entertainment. This led Minnesota labor economist Steve Hine to recently comment that, “A lot of the job mix that we see now compared to 2008 would be shifted towards generally lesser-paying occupations than we might have seen before the recession hit.”
- Evidence: the median wage offered to new hires declined from $12.99 last year to $12.50 this year.
- Nationally, 60% of the jobs lost from 2009-2012 paid a living wage ($13.84-$21.13) whereas 60% of the jobs added since the recession officially ended are low-wage ($7.69-$13.83).
So, what are we to make of this conflicted set of measures? Our response at The Jay and Rose Phillips Family Foundation of Minnesota is to focus in on improving job opportunities for low-income adults and their families.
For the unemployed and working poor, the last few years were a very challenging chapter in a long, sad tale of economic struggle. These charts from the Metropolitan Council show that, while incomes have declined across the spectrum over the past six years, the poor have suffered the steepest losses.
This 6-year decline is part of a 3-decade period of wage stagnation for low-income earners. Real earnings for the bottom 20% of Minnesota’s workers are the same today as they were in 1979 (Minnesota Budget Project). We see the consequences of this in increasing use of food stamps (up 85% since 2008, Food Research and Action Center), rising homelessness (doubled over past 20 years, Wilder Research), and growing disparities on a range of socio-economic factors (summarized nicely in a recent TC Daily Planet article).
This brief analysis confirms our ongoing assessment that low-income adults continue to need supports that are both of the highest programmatic quality and carefully attuned to the local labor market in order to break through the broader economic malaise and secure a living wage job.
Since July 2011, the Foundation has acted on this analysis by providing capacity building support – in the form of funding, AmeriCorps*VISTA members, and consulting assistance – to five established Twin Cities nonprofits that provide industry-focused job training and placement services. We call this project the Phillips Sectoral Employment Initiative (PSEI). Our long-term goal is to help these organizations develop programs and innovate strategies to become more effective “on-ramps” to living wage careers for low-income adults.
Because we are deeply committed to PSEI, and to the broader quest for better routes to living wage employment, the Foundation has worked with our grantees to carefully track participant outcomes and organizational changes. Two years in, we have collected data on over 1,600 participants served by these organizations.
If you are curious about what we are finding, here a couple of nuggets:
- Participants who entered training programs while employed and were placed into new jobs after training experienced an average wage gain of $2.34 per hour. That’s a 19% gain over average starting wages ($10.41).
- Most participants (74%) came into the five PSEI sectoral employment programs without employment, and those who were working earned fairly low wages. Those who completed training and secured new employment boosted their incomes to about the 20th percentile mark referenced in the chart above.
These are solid results for training programs that are typically short-term (2-5 months) and tuition-free. We plan to continue Foundation support for this kind of service. But, it isn’t enough.
Few PSEI program completers jumped up to “middle-income” jobs. Yet this is the threshold that must be surpassed for people to truly support their families, free themselves of the need for most means-tested public assistance, and look to a future of increasing, rather than decreasing, economic prospects.
So, what’s missing? We increasingly think it is the linkage of strong community-based programs, such as those operated by our PSEI partners, to strong pathways that nudge low wage earners further up the career ladder. This often means building ties between the entities that help people grasp the first rungs of this ladder (community-based organizations, adult basic education, public workforce programs) and the post-secondary education institutions that provide the credentials needed to climb higher.
Minnesota’s FastTRAC initiative is building these linkages through its grants to consortia that include higher education, community-based organizations, and adult basic education. Through our grantees we’ve seen how the FastTRAC approach is critical to the post-secondary success of low-income adults. We are pleased that $3 million was allocated in the last legislative session to sustain the FastTRAC initiative through 2015. But much more is needed to construct reliable, well-used routes that guide people out of poverty, through training and into middle-income jobs.
Fortunately, we are not alone in pushing for broader use of career pathways.
- The Governor’s Workforce Development Council has convened a Career Pathways Policy Committee to explore how the state can build and support this model of workforce development.
- The Greater Twin Cities United Way is also organizing a Career Pathways Forum on November 7th that will bring national experts to St. Paul to advise local policymakers, practitioners and funders about how to build stronger career pathways systems.
Stay tuned for more data and insights from the Foundation’s first two years of PSEI. Participate in our webinar on November 26th!
Attend the Career Pathways Forum and get involved in the growing dialogue about developing the home-grown talent we need to thrive in the future!
And, of course, please share your feedback and ideas. Contact Joel Luedtke, Senior Program Officer, the Foundation’s lead staff on employment strategies.