You don’t have to look far to find positive economic indicators lately. The stock market is reaching near record highs. Housing prices have returned to pre-recession levels. And the job market is driving low unemployment numbers. But despite the good economic and job news, workers on the lowest end of the wage spectrum are seeing fewer gains than those who earn more, according to the Working Poor Families’ Project Spring 2018 policy briefing. The report states that 1 in 3 working families in the U.S. is poor or low-income and may not have enough money to meet basic needs.
As companies look for more workers to fill various roles, finding and hiring low-wage workers and helping them develop internally may be a solution. But first, companies need to understand the needs of such candidates—as well as where to look for them and how to help them advance.
Recognizing And Removing Barriers
The reasons people work in low-wage jobs range from a lack of skills or degrees to a lack of access or other factors that make it difficult to find better jobs, says economist Harry J. Holzer, Georgetown University professor and Brookings Institution nonresident senior fellow. In his work studying low-wage populations and their barriers to advancement, Holzer found that skill deficits in written and verbal communication, poor problem-solving ability, and lack of occupational training or experience, among others, make it difficult for low-wage workers, especially those without college degrees, to find higher-paying jobs that offer advancement opportunities.
“The higher-wage companies are often looking for a higher level of skill, whether that’s measured by education and credentials or by previous work experience,” Holzer says. Informal barriers, such as lack of social contacts and social capital and discrimination, may also be factors, “but even once they’re in the companies, we know these populations have higher turnover rates. Turnover often prevents them from getting on a career ladder of some type that might exist in the company,” Holzer says.
Some organizations are working to connect companies with talented populations of workers who may not have traditional backgrounds or degrees. Organizations like the nonprofit Year Up combines rigorous classroom training and a paid internship to help connect disadvantaged youth with good jobs. The yearlong program offers professional and personal development, an education stipend, college credit, and other professional advisers and mentors to help young people prepare for upwardly mobile career opportunities. In addition to soft and technical skills, Year Up helps its students gain access to connections and become familiar with workplace norms, says Jeff Artis, Year Up’s national director of corporate engagement.
“If you’re a person from a disadvantaged neighborhood, however you want to define that, the norms for corporate America are foreign to you,” Artis says. “It doesn’t matter whether you come from an urban city or Appalachia. The norms of corporate America are strange to you.” Formal and informal apprenticeships and job-training programs may also offer pathways to advancement.
Staffing and temporary placement firms may offer another entry point for some workers. Becky Frankiewicz is president of ManpowerGroup North America. Prior to joining ManpowerGroup, Frankiewicz led Quaker Foods North America, one of PepsiCo’s largest subsidiaries. She says that lower-level workers consistently have trouble envisioning a career path beyond their current role. Feeling stuck can lead to decreased motivation, production challenges, and turnover, she says.
To earn their engagement and loyalty, organizations need to show low-wage workers the possibilities that lie ahead. “Part of the role [staffing firms] play today is creating a clear career path, and then tangible steps to advance, and so they know, ‘Hey, this is what the next role could be.’ It’s very important for low-level workers so they have hope for what’s in front of them,” she says.
Training And Supporting Workers
Once they find workers, companies themselves vary significantly in their willingness to invest in workers and help them progress along a pathway, Holzer says. “High-road” companies believe that high worker performance leads to the company’s success, so they invest in training and other support resources. “Low-road” companies cut corners to lower costs. U.S. companies are typically much more willing to invest in their professional and managerial employees than in training that advances low-wage workers, Holzer says.
In addition to some of the innovative training programs like Year Up, Genesys Works, and others, some of that training slack is being picked up by staffing firms. In 2016, Manpower launched MyPath, which assesses skills, provides career path suggestions, and offers training through online courses. A partnership with Rockwell Automation in Milwaukee provides skills training to veterans to help them secure advanced manufacturing jobs. The second class of veterans graduated in April. Out of 23 graduates, 18 have firm job offers with some salaries falling in the $50,000 to $70,000 range, and some exceed it, Frankiewicz says. Another pilot program with a large company trains and has employed more than 40 people with nonviolent criminal convictions. Former prisoners have trouble finding well-paying work.
Of course, it’s going to take a lot of 20- to 40-person programs to close the “opportunity divide,” which Year Up research puts at 5 million young people disconnected from stable careers. Staffing firms also have a financial incentive to train and place more job-ready candidates. And Holzer says more research is needed to find out whether informal apprenticeships and other training programs are effective in the long run.
But there are also signs of hope in the corporate sector. Holzer points to the Walmart Foundation, which has begun to make significant investments in programs that help develop low-income workers and promote career readiness. Employers like UPS are partnering with Grads of Life, another organization devoted to career readiness for young people aged 16 to 24 who don’t have college degrees. Holzer also says companies willing to participate in career and technical education programs that are growing in popularity may also find rewards. Successful programs include New York City’s Per Scholas, which provides free IT training; San Antonio’s Project Quest, which provides skills training and partners with employers; and Jewish Vocational Service, which has regional offices devoted to assist individuals and families to become self-reliant, including through employment and training services.
Ultimately, the need for workers could be the catalyst for the innovation and attitude changes necessary to connect more people to better opportunities for work. “Tight labor markets are often the single best antidote to exclusion,” Holzer says. “You can’t afford to indulge your prejudices anymore when you can’t find the people you’re used to hiring.”