US Workforce Development Supports for Working Families Resources in United States

US Workforce Development Supports for Working Families Resources

Welfare reform efforts during the 1990’s lead to a surge of workers into labor markets throughout the U.S. Although the ability of current and former welfare recipients to find employment and retain their jobs has been impressive, this group of workers has had only limited success in advancing out of entry-level, low-wage employment. The average hourly earnings of welfare recipients remains in the range of $7-8 per hour, even after they have spent years in the labor market. In general, low-income workers tend to move up the wage scale very slowly, even with work experience.[1]

Living in a low-income household can adversely affect an individual’s productivity and ability to learn. Poverty is significantly correlated with poor nutrition and health, unsafe housing, dangerous neighborhoods, and inadequate cognitive development of children.[2] Low-income families are nearly twice as likely as middle-income families to report cutting or skipping meals or not being able to pay for food, half again as likely to miss rent, mortgage, or utility payments, and twice as likely to lack health insurance as middle-income families. Low-income families are also more likely to put off needed medical care due to financial hardship.[3]

High-Wage versus Low-Wage Employers

One factor contributing to the recurring low-wage pattern is that workers often enter the labor market with jobs in smaller firms, those with higher turnover, and/or those in the retail trade and service industries that pay lower wages than other employers.[4] However, if low-income workers are given the opportunity to move to a high-wage firm, they have a much better chance to increase their earnings. Among those who have stayed with their original employer, over 60 percent of those who still have low earnings are with low-wage firms; in contrast, only 35 percent of the “complete escapers” out of low earnings are with low-wage firms. Among those who changed employers, the contrast is even more striking: over half of those who still have low earnings ended up with another low-wage employer, while only 14 percent of those who completely escaped this status are with low-wage employers.[5]

Career Pathways

An initiative undertaken by the Greater Cleveland Growth Association enables workers to get on a path to more advanced positions and a stable career from the start of their employment, while assisting employers in finding highly qualified employees at all levels. Through a partnership that brings together employers, community colleges, and public agencies, GCGA has defined advancement pathways that begin with relatively low-skilled and low-paying health care jobs at the entry level. Over time, workers can climb a career ladder that moves up to occupations that provide family-supporting wages. In additional to meaningful opportunities for local workers, this model simultaneously provides health care industry employers with a pipeline of workers for high demand occupations.[6]

Workforce Supports

An important part of the continuing support that state legislators can give their workforce includes ensuring that the housing, transportation, healthcare, childcare, and other needs of the workforce are met. In a global economy, employers must compete with firms in other countries that offer or guarantee all or some of the following benefits to keep their workforces stable and productive. Some of these are:

Affordable housing
Quality healthcare
A secure retirement system
Daycare provisions
Public transportation or the option to work from home
Flexible work schedules
Labor/Management cooperation[7]

It is widely recognized that the availability or lack of housing, transportation, and health insurance have the power to seriously impact a region’s economic health.[8] Investments in the infrastructure and support systems that working families rely upon can yield very impressive results by helping working parents succeed in jobs and improving the well-being of children.[9]

Housing

The U.S. Department of Housing and Urban Development’s measure of housing affordability suggests that families should pay no more than 30 percent of their incomes for housing. Overall, the median housing cost burden (the proportion of income spent on housing) on American families is 20.7 percent, but renters pay a median of 28.4 percent of their incomes while owners pay 19.6 percent.[10] The median income for owner households is $55,000 per year, while for renter households the median is only $26,000, less than half the owner median.[11]

Because low-income working families spend a larger proportion of their income on housing, they may face more frequent moves and attendant disruptions than their middle-income counterparts. In addition, the housing low-income families can afford may be of marginal or poor quality.[12]

Transportation

Investments in efficient and reliable public transportation or assistance with vehicle purchases can significantly benefit low-income workers. Low levels of car ownership, driver’s license revocations and penalties, and inflexible and time intensive public transportation can prevent low-income workers from obtaining and retaining employment. [13]

Because low-income families are often unable to save for larger purchases and may have little or poor credit history, they may be forced to rely on sub-prime lenders for high interest loans or have to purchase less expensive (and often less reliable) cars from “buy here/ pay here” dealerships. These options can end up costing the family even more, either through excessive interest payments or repair costs that can exceed the value of the vehicle.[14] The JumpStart program in West Central Wisconsin solves this problem by helping low-income families purchase late-model, warranted automobiles through its “in-house” automobile dealership.[15]

While car ownership may be a viable option for some families, many low-income families rely on public transportation. As a result of demographic shifts and urban development patterns, the demands on public transportation have grown and changed. From 1990 to 2000, 64 percent of the growth in metropolitan commuting was in flows from suburb to suburb, representing 46 percent of commuting trips at the beginning of the decade. The next largest growth area was the “reverse commute” from central city to suburb, representing 9 percent. The “traditional commute” from suburb to central city represents only 19 percent of the growth.[16] For service and entry-level employees with limited mobility options, transit is a key link to suburban-based jobs.

Colorado’s Transportation Expansion (T-REX) Project added 19 miles of light rail in the metro Denver area travel along the southeast corridor of Interstates 25 and 225.[17] After 5 years of construction, the $880 million, southeast train now transports commuters between metro Denver’s two major employment centers – downtown and the Denver Tech Center.[18] The new suburban rail line makes it possible for workers to get to where the jobs are without having to drive. As one rider said, “This is something that really helps people.”[19]

A February 2003 Wirthlin Worldwide Public Opinion Poll showed 81 percent of Americans support the use of public funds for the expansion and improvement of public transportation.[20] The poll also demonstrated that support for public transportation has increased dramatically not only in large cities, but also in smaller urban communities and rural areas. 40 percent of America’s rural residents have no access to public transportation, and another 28 percent have substandard access. It is estimated that rural America has 30 million non-drivers, including senior citizens, the disabled and low-income families who need transportation options.[21]

In a part of the country that would benefit from improved rural transportation because of higher rural unemployment, lower rates of car ownership, and historically limited public transportation, Tennessee’s public transportation system stands out. Currently, 11 transportation service providers operate in rural Tennessee and, in 2003, provided 1,425,104 trips to rural riders.[22]

Tennessee’s Long-Range Transportation Plan recognizes the need to expand public transportation services throughout rural areas, and TDOT has implemented regional Rural Planning Organizations (RPOs) to facilitate the identification and evaluation of rural transportation priorities. The RPOs will look at local and regional needs for all modes of transportation, including public transportation, and work with TDOT to develop transportation plans based on comprehensive land use plans, growth plans and strategic planning efforts.[23]

Childcare

The costs and logistical challenges associated with child care can dissuade a parent from seeking employment outside the home or from pursuing educational opportunities. A study by the Urban Institute finds that low-income families spend a large portion of their net income – between 12 and 18 percent – on child care.[24] More than 24 percent of all part-time students in colleges and universities in New Jersey said that finding child care is a “major problem.”[25]

Conversely, access to a high-quality, affordable child care system provides those previously unable to work because of child care issues an incentive to enter the labor market or enroll in higher education.[26] The New Jersey State Employment and Training Commission found that strengthening child care offers benefits to several groups:

parents through higher earning potential;
employers through a more skilled workforce and higher productivity; and
government through larger tax revenues, decreased parental reliance on government programs and lower unemployment.[27]

Healthcare

In 2006, the price of an average family insur­ance policy was $13,382 per year for a family of four while the median household income, with employer costs of health insurance included, was roughly $48,250. This means that a median income family spent more than a quarter of their income on health insurance premiums.[28] Given the high cost of health insurance, it is not surprising that 46.6 million Americans went without health insurance in 2005.[29]

Most Americans who have health insurance obtain coverage through their employers. However, many smaller firms are unable to offer this benefit. Only 41 percent of workers in firms with 3-24 employees are covered by their employer’s health insurance, and only 59 percent of workers in firms with 50-199 employees are covered.[30] Further, as health insurance costs have risen, even larger employers have tightened eligibility restrictions and have increased required employee contributions.[31]

The Illinois Covered plan recognizes that millions of moderate and middle income individuals in Illinois face a variety of barriers in getting access to affordable insurance. Some don’t sign up because they cannot afford the premiums for employer-sponsored coverage; others do sign up, but are paying too much for their employer-sponsored coverage and are not saving for other essentials such as retirement or their children’s education; and then others work for employers who do not offer coverage, leaving them with only one option: the very expensive individual non-group market.[32]

To address these problems, Illinois Covered includes a range of options – from access to new affordable insurance products, to rebates on private insurance for those who currently have health insurance, to direct state assistance – to make sure every Illinoisan has access to health coverage.[33]

[1] Fredrik Andersson, Harry J. Holzer and Julia I. Lane, Worker Advancement in the Low-Wage Labor Market: The Importance of “Good Jobs,” Technical paper No. TP-2003-08, (Suitland: U.S. Census Bureau, LEHD Program, July 22, 2003), 2.

[2] Administration for Children and Families, Helping Families Achieve Self-Sufficiency.

[3] Gregory Acs and Austin Nichols, An Assessment of the Income and Expenses of America’s Low-Income Families Using Survey Data from the National Survey of America’s Families, (Washington, D.C.: The Urban Institute, September 28, 2006), 7.

[4] Andersson, Worker Advancement in the Low-Wage Labor Market, 5.

[5] Ibid., 7.

[6] Workforce Innovation Networks, Reauthorizing the Workforce Investment Act: What Employers Say About Workforce Development (Boston and Washington, D.C.: WINS, 2003), 3.

[7] Oregon Workforce Investment Board, Winning in the Global Market: Oregon Workforce Investment Board Strategic Plan, (Salem: OWIB, 2006), 22.

[8] Nina Babich, Benchmarking Workforce Investment Boards: Critical Success Factors (Jefferson City: The Missouri Department of Economic Development, Division of Workforce Development, 2006), 41.

[9] Administration for Children and Families, Helping Families Achieve Self-Sufficiency.

[10] U.S. Department of Housing and Urban Development and the U.S. Census Bureau, Housing in America: 2005 American Housing Survey Results, (Washington, D.C.: HUD, 2006), 8.

[11] Ibid., 10.

[12] Acs, An Assessment of the Income and Expenses of America’s Low-Income Families, 23.

[13] R. Giloth, “Introduction: The Case for Workforce Intermediaries” in R. Giloth (ed.), Workforce Intermediaries for the Twenty-First Century (Philadelphia: Temple University Press, 2004), 11.

[14] Irene Jay Liu and Ana-Maria Garcia, The High Cost of Being Poor in Hartford, (Hartford: Annie E. Casey Foundation, n.d.), 6.

[15] Sreyra Sarkar, “Transporting Low-Income Workers to a Better Future in Rural Oregon,” Cascade Commentary, #07-6, (Portland: Cascade Policy Institute, March 2007), 1.

[16] American Association of State Highway and Transportation Officials, Transportation: Invest in Our Future, (Washington, D.C.: AASHTO, February 2007), 59, http://www.ctaa.org/ntrc.new/TIF1-1.pdf.

[17] Transportation Solutions, “T-Rex Project and Southeast Light Rail,” http://www.trexproject.com/.

[18] Leib, Jeffrey, “A Rail Easy Commute,” The Denver Post, (Denver, 11/20/2006).

[19] Ibid.

[20] American Public Transportation Association, Testimony of the American Public Transportation Association Before the House Subcommittee on Transportation, Treasury and Independent Agencies of the House Appropriations Committee on Transit Funding for Fiscal Year 2004, (Washington, D.C.: APTA, April 11, 2003), http://www.apta.com/government_affairs/aptatest/testimony030411.cfm.

[21] Ibid.

[22] Parsons Brinkerhoff, Summary “Tennessee Transit Tomorrow” a Public Transportation Plan for 2005, (Nashville: TDOT, June 2004), 1.

[23] Tennessee Department of Transportation, Tennessee’s 25-Year Transportation Plan: Plan Go – Vision, Strategy, Responsibility, (Nashville: TDOT, 2005), 26.

[24] Acs, An Assessment of the Income and Expenses of America’s Low-Income Families, 28.

[25] Brentt Brown and Saskia Traill, Ph.D.,.“Benefits For All: The Economic Impact of the New Jersey Child Care Industry,” (Trenton: National Economic Development and Law Center, 2006 ), 25.

[26] Ibid.

[27] Ibid.

[28] Committee for Economic Development, The Employer-Based Health-Insurance System (EBI) Is At Risk – What We Must Do About It, (Washington, D.C.: CED, November 7, 2006), 4.

[29] Ibid., 5.

[30] Ibid., 9.

[31] Ibid., 7.

[32] Illinois Covered Plan Details, http://www.illinoiscovered.com/details.html.

[33] Ibid.