One out of every six full-time U.S. workers earns less than 125 percent of the poverty line -- under $18,865 a year for a family of three. And the share of low-wage workers is considerably higher in many of the sectors with the most job growth: retailing, hotel and food services, health care, and human services. Full-time workers in the bottom tenth of the wage distribution saw their weekly earnings decline by about 1 percent over the past six years, reversing the trend of rising wages that occurred from 1995 to 2000. For low-skilled youths, finding even a bad job has become more difficult. The problem is especially acute for young black men, with only 33 percent of black high-school dropouts able to secure any type of job, and only 25 percent working full time in 2005.
Workforce development can be a promising strategy, but by itself it cannot compensate for inadequate schools, the serial disadvantages of poverty in early childhood, and a labor market that often leads only to more low-wage jobs. Workers would have a far better chance of improving their earnings if they were better educated before they entered the workforce, and if education and training were complemented by other labor-market interventions such as higher minimum wages, stronger unions, and a national strategy of creating good jobs.
School-to-Work Transitions.
Within the field of workforce development, one place to begin is to expose more teens -- especially low-income, black, and Hispanic youths -- to work experience. But since the end of the national labor-market boom of the mid- to late 1990s, employment rates of the nation's high-school students have declined, from 34 percent to 26 percent; and among low-income and minority high-school students, only 15 percent worked in 2006. This decline reflects both shrinking work opportunities and underfunded transition programs.
There is no shortage of good models. Career academy programs, for example, provide high-school students with academic and vocational training in specific occupations, with close ties to employers that provide students with work-based learning opportunities. These programs have had success in improving the annual earnings of participants, especially young men, in the first four to five years following their graduation. Philadelphia's Talent Development model -- which helps strengthen the core academic skills of inner-city high-school students while offering work-based learning through career academies -- has improved academic achievement and grade promotions.
Another good model is the National Youth Apprenticeship system proposed by Bill Clinton and Al Gore in their 1992 presidential campaign but never implemented on a national scale. A few states have pioneered in this approach, such as Wisconsin, with its Youth Apprenticeship Program, which provides formal classroom training and structured work experience in 21 different occupations for up to 24 months.
Worker Skills Upgrading.
A different challenge is raising the skill levels of people already in the workforce. But Department of Labor expenditures for training and employment assistance have been cut from $6.1 billion in 1986 to $5.2 billion in 2006. That translates into an expenditure decline of $63 to $35 per worker, even more when adjusted for inflation. The United States currently ranks last among 21 high- and median-income Organisation for Economic Cooperation and Development countries in terms of the share of gross domestic product that it devotes to active labor-market policies. Only 0.14 percent of the nation's GDP was devoted to such purposes in 2002 and 2003, versus 1.2 percent to 1.6 percent in six OECD nations, including Denmark, France, Ireland, and the Netherlands.
Again, some states have stepped into the breach. California, with its Employment Training Panel, reimburses businesses that provide training for frontline workers. Workers and employers both realize favorable returns on investment: The panel consistently outperforms the state's other training providers -- including community colleges -- in providing training that moves low-wage workers into better-paying jobs. Another innovator is Iowa, where the Iowa Industrial New Jobs Training Program floats bonds to finance training for businesses that create new jobs. A few other states, meanwhile, have adopted innovative approaches to funding training through unemployment insurance taxes.
Employers, absent government subsidy or prodding, tend to ignore the less-skilled, and tend to live with high turnover and undertrained workers. For 21- to 33-year-olds, employers have invested four times as much on education and training for workers with a bachelor's degree or higher than on high-school dropouts, and twice as much on college graduates than on high-school graduates. The United States is near the bottom of a group of 12 high-income countries in providing job-related education and training. It leads most countries in the dubious category of failing to use training to counteract inequality; the most skilled workers are the most likely to receive even more training from employers. Employer-provided education and training for workers who are better-schooled to begin with thus widens gaps in skills and earnings between America's best- and least-educated workers in the nation.
Career-Ladder Programs.
Programs to promote career-progression opportunities are promising in principle. But in occupations with flat job pyramids, it is not feasible to create many advancement opportunities. In much of the service sector, additional training offers meager rewards because career ladders are scarce. This characterizes jobs in health-care support such as nurse-aid, as well as child care, and much of the work in hotels, some retail sales, and food service.
For example, health-care career-ladder programs focused on nurse aides and other low-skill health-care occupations are finding that the multiple demands of workers' lives -- and a lack of academic preparedness and discretionary time -- make it difficult for them to succeed, and expensive to provide such training. It may take the average nurse aide three to four years just to finish the coursework needed to enroll in a licensed-practical-nurse program. For many low-wage workers, moving up to middle-class wages is likely to be a 10- to 15-year process.
That does not mean that we should give up on career ladders, but that we need to make sure that the ladders lead somewhere -- and that we are realistic about what they can achieve in particular sectors in the short run. For one thing, career ladders have to be supported by efforts to upgrade existing jobs. Union campaigns, in sectors such as home care, home-based child care, and hotel work start by raising the wage floor, then focus on restructuring jobs and career progressions (so there are positions for workers to advance into once they have built their education and skills base). [See Joan Fitzgerald, "Getting Serious About Good Jobs," TAP, November 2006.]
We also need to pay closer attention to what makes successful career-ladder programs effective. Union-led programs often have better outcomes because they also negotiate paid time off of work and offer tuition reimbursement -- two huge barriers to program completion. Strengthening union representation in the trade and service industries would help boost wages of low-skill workers and their future training opportunities. Workforce-development strategies need to be complemented with a national commitment to what occurs before and after people enter work. That means better education and poverty alleviation for children and their families, and a national commitment not just to train workers but to reward that training with better-paid jobs.
