Low-wage jobs cause stagnant living standards only when they are dead-end jobs. Deliberately designed occupational pathways can enable people to move up as they acquire more skills: Entry-level wages may be low, but people advance beyond them. A plumbing apprentice, a junior associate in a law firm, a medical intern or a news clerk at a metropolitan paper are all low-paid workers on the first rung of a well-paid career. To a very limited extent, career ladders also exist for lower-status jobs in services and manufacturing. A small number of nurse aides advance to nurses, day-care workers to teachers, chambermaids to concierges, tellers to loan officers and factory assemblers to skilled machinists. So why not extend this model to the rest of society?
Many career-ladder initiatives are being implemented today by community colleges and organizations, unions and government agencies, as well as employers and employer groups. But can this promising approach offset the broader trends in the economy that are limiting advancement potential? In part, the answer depends on choices employers make in how they structure work and the choices we make as consumers and citizens.
The research by the Russell Sage and Rockefeller foundations suggests that employers have significant discretion to choose either a model of low skills, low wages and frequent worker turnover or a "high road" built on high-performance work practices, investment in worker training that leads to advancement opportunities and explicitly structured career paths. The proof of that discretion is the considerable variation in ways that employers deploy technology and worker skills, among firms and even among different plants of the same firm.
In medical-equipment production, for example, advanced technology can be used in ways that produce a high road for workers (opportunities, skills, decent wages) or a low one. In the production of low-tech medical products such as syringes and catheters, high-volume production in fact relies on advanced technology and highly skilled workers. Conversely, in some custom-made high-tech products such as electro-surgical equipment, the technology is embedded in the product and, paradoxically, can actually be produced by lower-skilled workers.
Russell Sage Foundation authors Ann P. Bartel, Casey Ichniowski and Kathryn Shaw concluded that technology has, on balance, increased productivity and reduced employment -- but increased the communication, problem-solving and computer-skill requirements of those jobs that remain. In plastics production, researchers John W. Ballantine Jr. and Ronald E. Ferguson found that total compensation among workers in the same job varies by as much as $7 per hour, depending on whether the firm is a low-road or high-road producer.
With such variation within industries, what determines the feasibility of career-ladder strategies? One key factor is stability. Is the firm likely to stay in business, and in the same location long enough to invest in a stable and upwardly mobile workforce? Another is firm size. Is the company big enough to find it profitable to invest in worker skills? Another is public policy. In many service occupations, notably education and health, the government ultimately pays a lot of the bills and could structure employee advancement paths if it chose. But government may or may not use its leverage to promote career ladders. Yet another factor is the presence of absence of unions.
Looking across industries and occupations, one sees that the growing service sector, much of which must stay close to clients and customers, offers many opportunities to build career ladders. Health care is a promising area for creating career-ladder programs because demand for occupations such as nurses and lab technicians is fairly steady. And, of course, hospitals and nursing homes cannot relocate to Asia. As noted, government reimburses a large percentage of medical costs. Other locally rooted service sectors substantially underwritten by government are good candidates for career ladders, including child care and education. However, taxpayers have to be willing to pay adequate salaries and invest in training rather than just seeking the lowest possible costs. [See Joan Fitzgerald and Virginia Carlson, "Ladders to a Better Life," TAP, Vol. 11. No. 15 (June 19-July 3, 2000).]
As the Russell Sage research shows, the hotel industry has been a surprisingly fertile location for improbably generous career ladders, thanks to pockets of very strong unionization. Retail banking, which is not unionized but competes on the basis of customer service, presents a mixed picture.
In other service sectors, however, career ladders are stunted. The work itself lacks obvious layers of advancement, and companies are free to relocate. In the case of call centers, for example, parent corporations have often located centers far from a company's other locations where advancement opportunities may exist. Although Rosemary Batt, Larry W. Hunter and Steffanie Wilk point out that these jobs can be structured in ways to make them more interesting and remunerative, the career-ladder potential is still minimal as long as geographic isolation exists. Unionization can help, but it is often frustrated by the ease with which call centers can be relocated to lower-wage job markets (and countries). Public demand for better service may have some impact, but consumer markets are increasingly segmented, with high-volume customers already getting better service. Without regulation or greater unionization of the industry, the career-ladder potential is minimal.
Compared with services, manufacturing jobs are generally easy to relocate to lower-wage areas, and jobs are also vanishing thanks to rising productivity. Even a seemingly robust company with a growing order book may find itself downsized, relocated, acquired or overtaken by new technology. This institutional uncertainty makes it more difficult to have career ladders in much of, say, plastics manufacturing. On the other hand, in high-tech industries such as the manufacturing of medical instruments, at least some manufacturers find it profitable to take the high road, attracting, training and rewarding skilled workers.
Manufacturers that employ a highly skilled and specialized labor force are seemingly good candidates for career ladders. In the hosiery industry it is not uncommon for workers to apprentice for up to 10 years on highly complicated (and costly) knitting machinery, often with a family member or neighbor. But in the early 1990s, when the next generation of workers starting opting for college rather than factory work, firms came to rely more on groups that weren't rooted in the local kinship-based skills-transfer system, mostly African Americans and immigrants. Cooperation among firms and assistance from the Hosiery Technology Center have trained these workers, kept the industry competitive in its core product lines and created opportunities for expanding into other areas such as surgical hose. Although the net result of innovation has been fewer jobs, they are well paying and have career ladders.
Nonetheless, market forces may overwhelm even employers that choose the high road. Demand for hosiery products among women has declined. Large discount retailers that sell the majority of socks and hosiery products have gained enough market power to dictate prices to producers. Chinese plants have developed the capacity to fill large orders from these retailers, so competitive pressure looms large over smaller companies in North Carolina.
The career-ladder story is thus complex and highly nuanced. If we hope to use career ladders to give low-wage workers better opportunities, what's needed is a strategy for determining which sectors have promise, what level of government to use, and which public or private organization should be the intermediary that links low-wage workers with willing employers. Successful programs are often built on partnerships composed of employers, unions, community colleges and organizations, and government agencies. These pieces of the policy puzzle are interconnected.
At the federal level, the Workforce Investment Act (WIA) of 1998 attempted to streamline the nation's workforce-development system and coordinate the delivery of employment, placement, education and training programs. In contrast to its predecessor, the Job Training Partnership Act, the WIA was intended to offer convenient universal access to publicly funded services through One-Stop Employment Centers, sequenced service delivery, interagency coordination, greater accountability of service providers and local planning.
However, this legislation fell far short of a comprehensive approach to career ladders. At the time of its enactment, the idea that jobless people should "work first" had great currency. So the emphasis of most One-Stops is on placement rather than training and advancement. Individuals must proceed through the services in sequence, starting with job searches. In the words of Andy Van Kleunen, director of the Workforce Alliance, a policy advocacy group, "Many One-Stops view training [as] a 'last resort' for their clients, either as a matter of philosophy or because they just do not have the resources to invest in training for more than a few workers." In fact, research by the Center for Law and Social Policy shows that WIA money is training only about a third as many people as the Job Training Partnership Act, which was also underfunded. Clients barely get the skills they need for placement, let alone advancement. The Senate version of the WIA's 2004 reauthorization bill would increase funds for training and put more emphasis on career ladders.
Some localities have sought to use the WIA to build career ladders. Jackie Edens, commissioner of the Chicago Mayor's Office of Workforce Development, is asking the city's One-Stops to adopt a career-ladder focus in funding training programs rather than just supporting random training. The Chicago Workforce Board (workforce investment boards are the local policy-setting organizations under the WIA) is geared toward career ladders as well. The board is funding a pilot program in which 30 employers agree to adopt nationally certified credentials for entry-level positions as the first rung in a regional manufacturing career ladder. The program is creating a center that will give these credentials to all workers who complete the training.
But the WIA remains a kind of shotgun marriage between the welfare system and the job-training system. In the absence of a clear federal commitment to workforce development, state policy has the most potential for linking career ladders to economic-development strategies that encourage firms to invest in high-road manufacturing processes and worker education and training.
As the key link between workforce and economic development, community colleges are essential to this approach. As the Russell Sage study demonstrates, in states such as North Carolina, the economic-development strategy has long relied on community colleges to help existing industries stay competitive and to attract new growth industries with targeted workforce-development programs. But as the Russell Sage report reveals, many community-college programs are not up to industry standards. Despite the fact that many colleges have business-advisory committees, curriculum isn't regularly updated or based on standards and credentials actually used by businesses.
The extremely decentralized nature of workforce development in the United States is both a weakness and, occasionally, a strength. In Massachusetts, for example, the state's Building Essential Skills through Training (BEST) initiative has supported six industry-driven regional partnerships in addressing the workforce-development needs of front-line workers and developing standardized curricula in community colleges.
The BEST biotechnology initiative is a partnership of three workforce-investment boards, two community colleges, the Massachusetts Biotechnology Council and four biotech firms, each of which invested $1 million to match the state's $500,000 grant. The firms provided equipment, paid employee wages during training and assisted in curriculum development. The state funds went mainly to the community colleges to run the program for up to 80 participants through early 2004.
The lead school, Middlesex Community College, created a four-week training program for entry-level bio-manufacturing jobs. Trainees earned a minimum $13 hourly, with full benefits, and advanced to $15 to $20 per hour after completing the training. Once graduates have gained experience, employers may send them back for certificate or associate degrees in biotechnology, and then to even better paying jobs. The ultimate goal is to create a statewide bio-manufacturing curriculum administered through the community colleges. This skilled and specialized labor pool, in turn, attracts more biotech employers.
BEST has built career ladders in high-growth sectors of the state economy through effective collaboration among private industry and the state's education, workforce-development and economic-development agencies. Further, employers invest funds, equipment and services rather than just being the recipients of public funds. Community colleges benefit from a standardized curriculum that's aligned with the highest industry standards. (Unfortunately, the program is currently a victim of the state budget crunch and will receive no public funds in 2004.)
At the local level, the Boston Workforce Development Initiative was created through a partnership led by the Boston Foundation with the City of Boston Mayor's Office of Jobs and Community Services, the Commonwealth of Massachusetts and a funders' group that includes eight foundations. The initiative will invest more than $5 million over three to five years. The initiative seeks to create system reform in workforce development for the health-care and hospitality industries by:
• Providing technical assistance to strengthen the capacity of community colleges and community-based organizations in workforce development.
• Organizing workforce partnerships in the health-care and hospitality industries that create a continuum of education and training opportunities for entry-level to advanced workers.
• Advocating for public policies that move the state's workforce system toward achieving the dual goal of supporting the state's businesses and helping low-income and low-skill individuals earn family-supporting incomes.
Stories like these are heartening, but can they be generalized? A key question is whether such strategies can truly transform low-wage work, or whether they amount to tinkering around the edges of much more profound forces bifurcating labor markets.
On balance, the authors of Russell Sage's "Low-Wage America" are optimistic that more employers will see the benefits of skilled and loyal employees competing in the global economy. A more pessimistic view is that larger forces will swamp the high road. These factors include the increasing deregulation of the labor market, the "virtual" nature of more and more business enterprises (a few core employees and lots of far-flung contract workers or temps), business' temptation in a global, high-tech economy to cut costs by relocating many service-sector as well as manufacturing jobs, and the antipathy of most employers to unions.
Nonetheless, career-ladder programs are already making a difference for hundreds of thousands of low-wage workers, and they could raise the horizons and hopes of millions more. However, given all the temptations of cheap wages and footloose work, it will take a major commitment of national policy for the high road to become the norm.
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