As globalization, technology, and new business models and practices transform jobs, tasks, and skills, there is increased urgency around preparing American workers for the transitions ahead and creating pathways to the middle class. Issues to address include improving the effectiveness, financing, and information around education and training programs, as well as identifying the structural barriers—especially for low-wage workers—that need to be considered alongside skills-based options. These topics were discussed at a roundtable co-hosted by MIT Work of the Future and the Aspen Institute Future of Work Initiative in the spring of 2019, in Washington, DC. Participants included representatives from academia, major employers, non-profit research organizations, community colleges, worker advocacy organizations, foundations, and federal and state policymakers. The purpose of this blog is to highlight some of the key takeaways from the discussion.
MIT Professor David Autor shared recent research that finds that there has been a dramatic decline in the number of middle-wage jobs available in cities, and a growing polarization and occupational segregation between high-wage and low-wage workers in urban areas.
1)There is rising employment in high-wage (e.g. professional, technical, and managerial work) and low-wage jobs (e.g. cleaning, security, recreation, home health aides). Public and private actions should be taken to improve the quality of low-wage jobs while providing low-wage workers with opportunities to improve their skills through well-designed training programs that provide needed support systems.
According to the Bureau of Labor Statistics, more than a quarter of U.S. workers earn less than $25,000 each year, and the percentage of low-wage jobs is projected to increase over the next decade. While for college-educated workers most occupational relocation between 1980 and 2016 has been upward, among non-college-educated workers occupational reallocation has almost exclusively been downward. Based on the job structure of low-wage work, there are few opportunities for career progression, wage growth, or job security. One participant noted that we need to make “bad jobs” into “good jobs,” which can involve improving the minimum wage, providing career paths, and potentially “professionalizing” certain occupations (such as home health aide workers). Expanding the Earned Income Tax Credit was given as one example of how to increase pay for low-wage workers. Another strategy discussed was helping low-wage workers develop new skills to obtain middle-skill jobs. As MIT Professor David Autor noted, “there is not an absence of good jobs…but many people can’t qualify for them.” For training programs to be successful for low-wage workers, they need to address the support systems that create stability and the ability to participate, from reliable transportation to child care. Programs that help workers in routine service jobs transition to middle-skill jobs—such as those in the skilled trades, medical vocations, construction and repair—expand opportunities for workers without a four-year college degree. As low-wage workers move up the occupational ladder, it could also create pressure for higher pay and better working conditions for workers who remain in lower-paid service occupations. The changing demographics of an aging workforce will also likely put upward pressure on wages for lower-wage workers.
Multiple participants noted that there will continue to be middle-skill jobs in our economy. These jobs will still require fundamental skills, such as reading, writing, arithmetic, and social skills, along with new digital skills and specific occupational competencies, developed ideally in concert with industry. As one participant noted, we need our employment and training systems to be flexible so that they can work with employers on providing specific skills for specific jobs.
2) Over the last forty years, the decline of middle-wage jobs in urban areas calls into question the idea that lower-wage workers in less dynamic areas should relocate to cities.
Professor Autor’s recent research finds that there has been a dramatic decline in the number of middle-wage jobs available in cities, and a growing polarization and occupational segregation between high-wage and low-wage workers in urban areas. He observed, “There was a time when less educated workers were climbing an occupational escalator in cities. They were in offices, they were in factories. But now they are in a segregated type of work. They do services: food services, entertainment, cleaning, home health care, and recreation.” Another participant observed that the lack of middle-skill opportunities for those with a high school degree or less calls into question policies such as vouchers or relocation grants that have been aimed at encouraging rural residents to move to more economically dynamic cities. Today, there is no urban wage premium for low-wage workers.
3) The community college system, a critical piece of our skills delivery system, provides effective skills training despite being under-resourced, and needs to be adequately funded.
MIT Professor Paul Osterman noted that community colleges are the largest provider of training in the country. There are over 1,200 community colleges across the country, and approximately 6 million students in credit courses and another 6 million in non-credit programs. One participant, who heads a large urban community college, noted that the community college that she runs has about 50,000 students, and approximately 35,000 are low-income students. Professor Osterman described community colleges as an “underappreciated and underfunded asset.” Roundtable participants were supportive of providing additional resources to community colleges. In addition to state efforts to increase support for community colleges, one federal policy proposal that was mentioned involved providing an additional $20 billion to community colleges in return for better accountability and transparency around outcomes for community college students. Other ideas included providing additional services to low-income students and expanding community colleges in rural areas.
At the same time, some participants highlighted the challenges that some community colleges have working with employers, as well as the ability to track outcomes for students who attend community college.
In addition, other intermediaries, or job training programs that are distinct from community colleges, have been studied and shown to have positive outcomes. Successful models include wrap-around services that provide participants with supports like child care or transportation.
4) Apprenticeships and work-based learning opportunities should be expanded.
Multiple participants, including two who run state-wide employment programs, spoke about their efforts and experiences expanding apprenticeship programs. One participant noted that there is an “apprenticeship revolution” taking place in the economy. The inability of students to complete college was raised as an important argument to encourage more students to become apprentices. While apprenticeships have traditionally been reserved for jobs in the building and trade industries, one participant spoke about efforts in his state to create opportunities in child care, food preparation, health care, and information technology. The Swiss model of apprenticeship was raised, including specific examples of U.S. companies that are hiring workers through these programs. It was cited that the benefit to employers can be a 7-10 percent return on an investment of $150,000 over four years. Overall, close partnerships with employers that are trying to fill specific job openings can increase the effectiveness of education and training programming. One constraint to offering more apprenticeship programs is that community colleges have very few resources to support them.
Work-based learning, like apprenticeships, provides an example of training models that benefit both employers and workers, and should be expanded. There is significant innovation and experimentation taking place in this area and rigorous evaluations will be needed to help clarify the effectiveness of these options, especially for low- and moderate-income learners.
5) There is a need for education and training programs to be tailored to local needs while also finding best practices that can be scaled.
A participant who runs a national training provider that has over 3,000 locations across the country noted that solutions cannot be “one-size-fits-all” and programs will vary by region and industry. The participant underscored this point by saying that solutions will have to be “hyper-local” in that they are responding to the jobs that are available in a specific location and the nature of the workforce that exists in a specific labor market. At the same time, Professor Osterman noted that we need to create a system that better diffuses best practices while also bringing them to scale.
6) New financing mechanisms are needed to properly resource education and training opportunities.
Existing financing systems for education and training are heavily reliant on the traditional student loan program. This system has left many students with burdensome debt and created obstacles to upward mobility. Many alternative options to improve our current system of financing education and training were discussed, including ideas such as:
- A new proposal creates a tax on employers that rely on low-wage work to finance training programs for low-wage workers. One state option is the “blue collar training tax” that is used in Delaware. This tax raises $5 million annually that is dedicated to state funded training programs.
- Federal legislation has been introduced that creates a worker training tax credit. This proposal is modeled on the Research and Development tax credit, which provides a 20 percent credit for expenditures in a given year that exceeds a three-year baseline of spending on research.
- The construction industry uses a model where multiple employers contribute to a fund that can be used for worker training across employers.
7) Better information is needed on outcomes of training programs.
There are many new training programs that are being developed for which research on effectiveness is lacking. Given the proliferation of training options and delivery mechanisms (e.g., boot camps, badges, online offerings), an effort is needed to help workers sort through the various options and understand the expected return on investment from these programs and their ability to result in concrete job opportunities. Information on who utilizes these programs is also needed so that policymakers and other funders can better understand whether they are providing opportunities to all segments of the workforce, not just those with a more solid skills foundation.
In discussing how education and training systems should evolve, the roundtable participants raised a number of important questions. For example:
- How can traditional education and training institutions, as well as local and regional support organizations, embrace and integrate new tools and technology for learning while working more closely with local industry?
- What resources are needed to increase evaluation and validation of new training programs?
- How can we learn from the private sector where some firms appear to be investing more in human capital development than in the past, and help encourage more firms to increase their investment in training?
- What best practices exist for establishing sector- and industry-wide validation for the quality of industry-led training?
These were just some of the questions raised by participants and deserve continued exploration. In addition, the roundtable provided an opportunity to connect new academic research with examples of on-the-ground work and new policy ideas, and to foster discussion around research gaps. Overall, participants agreed that today’s relatively strong economy offered the best time to innovate, experiment, and invest in proven and promising new models for educating today and tomorrow’s workforce.
This event was made possible through support by the Siegel Family Endowment.
Liz Reynolds is executive director of the MIT Industrial Performance Center and a lecturer in MIT’s Department of Urban Studies and Planning.
Alastair Fitzpayne is executive director of the Aspen Institute Future of Work Initiative.