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Are There Good Jobs for Low-Skilled Workers?

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Document date: January 04, 2000
Released online: January 04, 2000

MR. ROBERT LERMAN: Welcome to the Urban Institute for the very first First Tuesday of the year. Today, we're going to be talking about jobs, good jobs, for low-skilled workers, and I just want to make a few preliminary comments. I'm Bob Lerman of the Urban Institute.

And the first comment is that just phrasing the question in the way we are phrasing it, are there good jobs for less educated workers, is, itself, a sign of good times and a sign of optimism. The unemployment rate of people with a high school degree only, no college at all, adult workers, is now down to 3.2 percent, even for high school dropouts who are 25 and over, the unemployment rate is at 6.5 percent. So unemployment is down even for less skilled workers.

Second, we've seen, despite a very large inflow of welfare, former welfare recipients and current welfare recipients into the job market, we've seen a market which has been able to absorb mostly mothers heading families with actually a reduction, a significant reduction in their unemployment rate. In fact, virtually all of the added supply of welfare recipients entering the market, which there is nearly a million, have found jobs. Moreover, we have a transfer system such that if recipients are able to find jobs and work steadily for a year and take advantage of the supplementary programs, they will move above the poverty line. And that, alone, I would say would be a fantastic achievement relative to what we've seen, say, just a few years ago.

But, now we're setting our sights even higher, not just for welfare recipients, former welfare recipients, but for all less educated workers who have, after all, taken a hit in these last couple of decades.

So we have with us today three speakers to address the central question that you came to hear about, are there good jobs for low-skilled workers. First, Harry Holzer, who is professor of economics at Michigan State University, very recently completed a stint as chief economist for the Department of Labor, and now is a visiting fellow here at Urban Institute. He'll be followed by Demetra Nightingale, a principal research associate at the Urban Institute in the Human Resources Policy Center. And Nancy Pindus, also of the Human Resource Policy Center, is a senior research associate.

Now, we're going to ask each to address a particular question. Harry is going to talk broadly about what are the job and wage prospects for workers at various levels of education. Demetra is going to address the central question, are there good jobs for less-skilled workers overall. And Nancy is going to take a sectoral approach and look at the question, what can we learn about the availability of decent jobs and mobility and transferability by looking at some related industry sectors.

So with no further ado, I'll turn it over to Harry.

MR. HARRY J. HOLZER: Thank you, Bob.

I thought the best thing I could do was just to give you a sort of paint with an overly broad brush overview of what's going on in the labor market right now in terms of different levels of skill demand. How much demand is there for people who don't have college degrees, what kinds of jobs do people have access to, what kinds of things are employers looking for when they're hiring in this population, especially in those jobs that might pay above sort of minimal levels of money, and then Demetra and Nancy will go into a lot more detail about what kinds of jobs those are, and how people can get them and keep them.

Let me start with the basic fact, the Bureau of Labor Statistics at my previous employer, the Department of Labor, recently released their new labor market projections for the next ten years or so, and a basic fact was that about one-third of all net new jobs are going to require college diplomas over the next ten years. Again, that's one-third of net newly created jobs. Now, that's more than the 22 or 23 percent of current jobs that require college diplomas, or at least jobs in categories that usually require college diplomas. Which leads some people to say, you know, maybe this college thing is really overstated, maybe we talk too much about it, and we think too much about it. I think that would be a misreading of these numbers.

What's happened in the United States in the last 20 years, as virtually all of you, I'm sure, know, is that the earnings gap between college graduates and non-college graduates has more or less doubled in a 20-year period, and there's a good reason for that. And the reason is that employers are increasingly looking for a set of skills that they don't think they find among people without college diplomas. Whether those skills are sort of basic cognitive skills, or problem-solving skills, or more vocational, specific vocational and job-related skills, employers aren't used to finding them in their non-college workers, and therefore, increasingly, they look for the college diploma, even in jobs where traditionally they haven't required that, and that's going to continue to be the case for a while. It doesn't mean that that requirement is immutable. It doesn't mean that people without that can't get some of those good jobs, but increasingly that's the first thing employers look for. That will continue to be the case.

But having said that, there still are, clearly, a lot of jobs which do not require college degrees, and some of them do pay reasonably well. Broadly speaking, what are the occupations and industries that workers can find some of these jobs in? If you have any background in labor and economics, you're probably used to thinking about one digit occupations, one digit industries, and so I'll talk at that level of generality: where are the good jobs located for people without college?

College graduates, by and large, are concentrated in the professional categories, and higher level management positions. So the jobs for people that don't require those degrees but still pay reasonably well are lower level management jobs that often do not require particular levels of education, but do often require experience in the line of work. Jobs that we broadly label technician jobs. That can include anything from being a licensed practical nurse or a lab tech to being a computer programmer to being a paralegal, a pretty broad range, but often requiring if not a college diploma at least some college or some kind of certification that you've been trained in that line of technical work.

Moving to areas that don't even require that level of certification, the clerical and sales jobs, which both cover very broad ranges. There are sales jobs which do require college degrees, and do require a lot of technical knowledge. Obviously there are very low-wage sales jobs that require virtually nothing. A pretty broad gamut there.

And in the blue collar area, the sort of skilled crafts, and semi-skilled operative jobs, where you're either operating some kind of piece of equipment on a factory floor, or maybe transportation equipment, or something like that, all usually paying reasonably well.

Clearly, some of those occupations are not growth categories. Clerical jobs, especially secretarial jobs, have been declining in number, as secretaries are being replaced by PCs. Obviously blue collar jobs are growing in some areas, but are overall not keeping up with the growth in the labor force. Skilled and semi-skilled blue collar jobs are shrinking as a fraction of the labor force, even though there is some net growth in the absolute numbers of those jobs. The areas where jobs are growing most rapidly that don't require college are the technician jobs and the sales jobs. And those are the places that people need to look for a lot of these jobs as long as they have minimal amounts of skill.

Now, the industries—you know, we're so used to thinking about manufacturing and services and the contrast between those two that I think we miss a lot of the other action going on. For one thing, there are other important sectors that pay reasonably well besides the manufacturing sector for non-college graduates. Construction has been booming in this country for the last seven or eight years. We've added roughly a million construction jobs to the payrolls, and those pay well at all levels.

The transportation and communications sectors, a relatively high-wage sector, increasingly providing job opportunities for non-college graduates. And, of course, the wholesale trade sector. We talk a lot about retail trade, but wholesale trade is an important sector with wages on average well above what they are in retail.

Now, even when you look at retail trade, you look at services, you know, we have stereotypes of what those jobs are, and the stereotypes aren't often consistent with the reality. When we say retail trade, people automatically think McDonalds, or eating and drinking establishments, where wages, in fact, are very low. But if you look at wages in department stores, or in supermarkets, average wages in those kinds of retail trade establishments are significantly higher than at McDonalds, and often provide good opportunities for people to move up.

Again, if you look at the service sector, we often think of personal services or child care services. But, in fact, the fastest growing area in the services are business services, which includes everything from advertising, computer services, temp agencies, building cleaning and building security; again, a very wide range, but not the typical stereotyped personal service job that almost always pays very, very little. So, again, when we think of retail trade and services, we need to think more broadly and recognize the diversity in those sectors.

Now, having said all that, and talked about these broad occupational industry categories, what are employers looking for, especially for a job that pays above the minimal level, beyond kind of the usual education and experience kinds of things. Again, employers are most concerned about skills, and skills really matter at a variety of different levels. The most elementary level is what we call job readiness. Every single employer wants to see some minimal job readiness, the ability to show up on time every day, having a minimal level of responsibility, willingness to follow instructions, et cetera. Basic cognitive skills are becoming more and more important in the labor market. Increasingly for good blue collar jobs, workers have to be able to run numerically controlled machines and have to have a good facility with arithmetic and with numbers to be able to manage those machines. Soft skills are becoming increasingly important, by which we mean social and verbal skills, the ability to communicate clearly with customers and with co-workers. Of course, higher levels of cognitive skills as well, problem-solving abilities and the like, as well as specific vocational skills in every area.

So, when we talk about skills, employers are looking for a broad range of things besides just a credential, and how else do they gauge those things? Well, they look at general work history and work experience, they look at how well somebody comes across in an interview, references, even how well the person fills out an application to see if they can spell and write pretty clearly. Needless to say, these are pretty subjective ways of judging workers skills, but sometimes it's all that an employer has before they've had some time to look at the worker and the job. So, it's important for workers not only to have the skills, but to be able to effectively communicate that broad range of skills and experiences to the perspective employer.

Other barriers besides skills, well, the whole range of job matching and job retention problems, sometimes having to do with information and contacts, knowing where the job is located in any given metropolitan area, transportation and child care you hear a lot about in the welfare reform discussions. Discrimination, unfortunately, remains a reality in some of these labor markets, especially in small establishments. And other stigmas that less educated, the really bottom end employees often bring to the labor market. Having long periods of time without any work or schooling sends a pretty negative signal to employers. Certainly, having a criminal record among men, and less educated minority men particularly, makes employers often very reluctant to hire. So in addition to the skill problems, these are some of the other barriers that the least educated workers and least skilled employees need to overcome to get that job and then to try to maintain it in the workforce.

Finally, the last thing I'll say before I stop, you know, what is the role of sort tight labor markets in all this. Bob mentioned the sort of strong, great tightness of the labor market that we're now experiencing. This often causes employers to forego what I would call non-essential hiring criteria, non-essential preferences. For instance, employers in less tight labor markets might often ask workers to have some experience in the line of work, but now they may not be able to afford that luxury. They may have to loosen their usual requirement of some earlier experience, or maybe of even having a college diploma or a high school diploma. Employers may have to reduce their discriminatory preferences for and against workers of certain ethnic types because, you know, when they can't find their most preferred ethnic group or gender, sometimes they fall back on other groups. And historically the periods of time in which minorities have made the most progress in American labor markets, such as in World War II, or in the late '60s, are exactly these very tight time periods when employers have to reach out beyond their usual pools to find workers, and that's going on right now.

Still, we shouldn't overstate what tight labor markets are going to solve. Number one, the basic skills that cannot be foregone [that] employers are still going to be looking for, in however they do that, and certainly in terms of work performance for maintaining the job that people have gotten. And, of course, you know, we shouldn't kid ourselves. You know, these tight labor markets are not going to last forever. And there will be another downturn. I don't know exactly when. We hope it's not too soon. Once it occurs, it will take several years to regain this level of tightness that we've now been enjoying. Still, we have a window of opportunity right now, where we can get less educated workers into the labor market, and get them some important work experience that may help cushion them from the blows that might occur during a recession. And I think we need to use that window of opportunity as effectively as we can right now.

And maybe I'll turn it over to Demetra to talk in more specific detail about how to do that.

MS. NIGHTINGALE: Thank you, Harry.

Certainly, you have to bear with me. Hopefully my voice won't give out. As Harry said, the economy is booming. Unemployment is at an all-time low, and nearly everyone who wants to work can find a job. And the Bureau of Labor Statistics, as Harry just mentioned, predicts that there will be about two million net new jobs a year over the next decade. That's a continued strong growth. And the strong economy has also, as you know, helped fuel welfare reform. Nationwide the welfare caseloads are down, and in some places like Wisconsin, there are 90 percent fewer cases, families, on welfare today than there were in 1993. That's an astounding shift. By most accounts, over two-thirds of the former welfare recipients have joined the workforce; but they're really joining the workforce, and they're joining in at the bottom end of the job market with other low skilled workers earning typically between $6 and $7 an hour. And many are not working consistently over the course of a year.

In order to identify whether there are any good jobs for former welfare recipients and other persons with limited skills, Edgar Lee and I are analyzing data from the Occupational Employment Survey of the Bureau of Labor Statistics in a study funded by the Annie Casey Foundation. BLS characterizes over 500 occupations now by the typical skill level of the incumbent workers who are in those jobs, and these 500 occupations represent over 80 percent of all workers in the United States. So, it's a large portion. We're looking for jobs that pay enough to support a family, and for which a person without a college degree can qualify.

So we use two criteria in deciding whether or not a job is a "good" job in our definition. First, the pay range had to be high enough to support a family. Our criterion was that at least 30 percent of the workers in an occupation make $13.25 an hour or more, that's about 150 percent of poverty for a family of three if somebody works full-time year round.

And the second criteria was that a good job would be occupations where most of the workers are working full-time, a low rate of part-time employment.

So, first, the easy question: Are there jobs for low-skilled workers? And we, indeed, found that most occupations in the United States, as Harry said, do not have formal educational requirements, per se. You have a handout in your package showing the distribution of occupations by qualification level. About 69 percent of all workers today—that's 91 million workers in 1996—were in jobs where the typical worker did not have a college degree, and nearly 40 percent of all workers today—that's about 50 million people— are in jobs where workers qualify with very little training, one month or even less. So, of the occupations that BLS classifies, about 21 percent require four years of college. The rest require considerably less. Clearly, there are jobs out there for those with little education.

But are any of these jobs good jobs? Good, that is, according to our criteria, meaning they pay enough to support a family, and they are steady enough to continue to support the family. Not surprisingly, many of the low-skilled jobs had correspondingly low wages. But there are some low education jobs that do pay relatively high wages, as you can see on the handout that's several pages long that lists a lot of occupations. At the lowest experience level, which is on the last page of that table, which requires just one month or less of job training, there are really only a few occupations that pay well, that meet our criteria as a good job. And all of them, I think, require either taking a written exam or being licensed. That includes Postal Service workers, utility meter readers, and truck drivers. But they are available for people at the low education level.

But as the experience and skill requirements rise, not surprisingly, so do wages. Among the better jobs for which workers can qualify with moderate or long-term job training, which means one to 12 months or more, many are in the machine, manufacturing, and trade occupations, such as mechanics, equipment operators, installers, repairers. And of the good jobs that are on that list, we also wanted to identify those that were expected to grow over the next decade, presumably because that's where the best opportunities will be.

As Harry mentioned, the Bureau of Labor Statistics every year updates their projections on the fastest growing jobs, and these 20 occupations are the ones that BLS projects will have the largest increase in the number of employees, number of jobs over the next decade. Not all of the so-called "good" jobs that are o the list that you have, for example, will be growing, and BLS projects that there will be a decline in telephone station installers, railway and other transportation operators, electric meter installers, some types of printers, and not surprising welfare eligibility workers, all of those are good jobs according to our criteria for people with little education, but they're not growing.

So our candidates for the best jobs for low-skilled workers, based on wages, full-time work and projected employment are starred on the list that you have in your handout. In the post-secondary training category, for example, the good jobs we identified include auto and aircraft mechanics, data processing, equipment repairers, and broadcast technicians. In the category where related work experience alone is likely to qualify one for the job, the good jobs include, as Harry mentioned, various managers and supervisors. Again, these are good career ladder options. For those who have moderate or longer term on-the-job training, here to there are many mechanic and repair jobs, several building trade occupations, a major growth area with corrections officers nationwide, insurance adjusters and investigators, and a new occupation desktop publishing specialists. So, again, in building trade, construction, and in some of the mechanical and repair operative positions, there are jobs.

This occupational analysis suggests a few implications for programs that are serving low-skilled workers, and not just welfare recipients, that I would like to just briefly mention. Hopefully we can talk about these as a group, too, because I know many of you have a lot of experience in this area. First, in looking over the list that you have, it was striking to us that so many of the good jobs seem to be in occupations where women have not typically worked, machine and equipment installers, the operators that Harry had mentioned, truck drivers, and the like. This is certainly good news for low skilled men, particularly non-custodial fathers of welfare children, which is a new high priority target group in welfare reform. But it doesn't bode well for women in traditionally female occupations.

So women who are interested in such non-traditional jobs should be strongly encouraged to pursue them, and we might want to think of ways to restructure those jobs to make them more appealing and attractive to women, since it's these non-traditional jobs that seem to provide the clearest opportunity for wage advancement for those persons without college.

Second, there appear to be many opportunities for career advancement from low-wage, low-skilled entry occupations into supervisory or management jobs. The base qualifications on having worked in a related entry level, non-supervisory position, for example, in the clerical area, food service, marketing, and sales, as Harry talked about. And these clusters of occupations can actually cut across several industries, which should open up opportunities that cut across industrial sectors.

And, third, there seems to be a number of inspection type jobs that provide fairly good wage potential, brokerage clerk, insurance adjuster, and no higher education is required, but presumably, here again, there will be selection factors that enter into the hiring process, possibly including a test of reading or math and writing.

None of what I've said here, though, means that there are plenty of good jobs to go around. Quite the contrary, the median earnings for workers without college is still low, hovering around 150 percent of poverty for a family of three. But our analysis does identify which of the many jobs that are available to workers without college appear to provide the best wage opportunities. And just to sum it up, BLS, again, projects that there may be over one million net new jobs each year over the next decade that require just on-the-job training, no post secondary education, or college.

There's a good chance that welfare recipients and other low-skilled job seekers can qualify for these jobs, but about half of the jobs are likely to be in occupations that typically have a high proportion of part-time workers, and low wages. There are, though, many relatively good jobs for workers with low skills and limited education, especially non-traditional jobs for women, but also supervisory and management track.

So, the program messages, three program messages that I'd like to leave you with. First, target on non-traditional jobs for women. Second, focus on occupations and industries that are growing. And, third, find entry level jobs that have some potential for moving up into supervisory and management positions.

Nancy.

MS. NANCY N. PINDUS: Thank you, Demetra.

That leads into what we did, which was look at some specific growth occupations. We've just learned about a method for identifying those jobs that do provide the best opportunities for low-skilled workers. Now, that was the top cut, those jobs that meet the specific criteria without any changes in their existing skill requirements, their work schedules, or their pay structure. But Demetra also points out that these jobs represent only about half of the jobs available for low-skilled workers, and they're concentrated in traditionally male dominated occupations.

So, yes, the first message is to go for it. We should use this information to place low-skilled workers in the best possible jobs, but clearly that isn't where everyone is going to end up. And that's why we did the study that we did, which I completed with a team of researchers here at the Urban Institute, funded by the Joyce Foundation. It took another approach to considering opportunities for low-skilled workers, and we focused on specific industries, skills, and mobility within and across the selected industries. The industries we selected were health care, with an emphasis on long-term care, hospitality and child care. And if you go back to that slide we just showed on the top 20 occupations with the greatest demand, you'll see that more than one-third of those occupations are in one of those three industries that we selected. And that our study also covers four of the 11 fastest growing industries that are on Demetra's list.

Women are over represented in these industries. While about 51.8 percent of workers in all industries are women, 56 percent of hospitality workers are women, 83.5 percent of health care workers are women, and 99.6 percent of child care workers are women.

We used a three-prong methodology in our study. We analyzed a national survey data using the survey of income and program participation over a 32-month period. We also conducted focus groups of workers in these three industries, and interviews with employers and industry associations. The information collected was analyzed to understand how different industry structures and skill requirements might interact to promote a more favorable environment for low-skilled workers to identify opportunities to improve mobility and advancement low-wage workers in the selected service industries, and to recommend policy and research approaches which encourage and enhance those opportunities.

Our original thought was that we saw across industry worker mobility as a plausible means of advancement because there were common skills across industries, and common employers across these industries. These three industries are within the service sector of the economy. The jobs generally require attention to customer satisfaction, a desire to help people, and good interpersonal skills. New types of long-term care setting, such as assisted living facilities, are bridging the gap between nursing homes and hotels. In fact, major employers in the hospitality industry, such as Marriott and Hyatt, are expanding in the assisted living market. So, theoretically, workers that are trained with a core set of skills that could be applied to a number of these settings would be at an advantage in the future labor market.

The three sources of data that we used yielded fairly consistent information. I would just like to summarize the results in three areas, cross-industry mobility, industry structure and characteristics, and training.

In the area of cross-industry mobility, we were somewhat disappointed in finding limited evidence of mobility between the three focused industries, we really thought there would be more crossover between the three. But across all industries, less than 4 percent of the workforce moved into a new industry each month as compared to an average of 2-1/2 percent of workers in these three focused industries. Turnover is higher for low earners, and industry turnover is higher in the hotel and child care industries as compared to the health care industry. Very few of the workers employed in any of these three industries were employed in more than one of them over the 32-month period.

Industry opportunities. In the focus groups the workers reported that their choice of industry was related to their preference for the job content or working with a certain population—such as, they enjoyed working with children—and simply the availability of jobs at the time that they were seeking employment. While the workers perceived similarities in some of the people skills across these jobs, there was really rarely any consideration in seeking new job opportunities and career moves based on those common skills. Wages were an important consideration, though. We've found that marginal changes in hourly wages were often the primary motivator for taking a similar job with another employer. Sometimes as little as five or ten cents an hour increase in pay would motivate a worker to change jobs. And employers are just beginning to think about the common skills across industry, and cross industry mobility.

Factors that we think will likely result in more cross industry thinking in the future are labor shortages, which promote employers to explore and identify new sources of labor, which is what Harry referred to earlier in this discussion, and the convergence of the three industries and product lines, as a result of corporate consolidations, especially in the long term care and hospitality industries. In terms of industry structure and characteristics, we found that the three industries really were quite different from each other, which results in differences in their opportunities and their prerequisites for advancement. The hospitality industry offers the most opportunity for advancement for those with limited formal education. The highest earnings potential exists in the healthcare industry, but advanced education requirements are necessary. Childcare is striking for the low returns to investment in education, and the lack of employee sponsored health insurance.

The key factors that improve mobility and advancement opportunity in an industry include expansion and job growth, 24-hour operation, high turnover, and a wide variety and many levels of jobs within an organization. For example, both hospitality and healthcare organizations need 24 hour coverage, so supervisory as well as entry level opportunities exist for three shifts a day, which provide more openings and more chances to advance.

A high turnover increases the number of jobs available at any one time, and may improve advancement opportunities for those who remain with an employer, because their experience becomes a valued commodity. Childcare centers offer only a very few level of jobs, which limits advancement opportunity. Healthcare offered the widest variety of jobs and level of advancement, but also has the most education and licensing requirements. The earning potential in any industry is also affected by market factors, which varied across these industries.

For example, government reimbursement rates keep wages low in long term care. Union representation is expanding in service sector organizations that have not traditionally been unionized in the past, such as nursing homes. And this might affect wages, benefits, and advancement opportunities. The childcare industry representatives noted that despite the low earnings of childcare workers, owners and operators of childcare centers struggle to stay afloat because of high insurance costs, facility licensing requirements, and the inability of parents to pay higher fees. So there is a real need to look at some industry restructuring to create opportunities in that particular field.

We learned some interesting things about training, as well. Required on the job, or in service training doesn't always routinely lead to advancement for workers. Most of the employers in the focus industries do, in fact, provide or arrange for in service training, but this training includes job specific orientation, skills that the employer determines to be necessary for the job, as well as training required by licensing or regulatory authorities, such as safety and sanitation training for food service workers, CPR training for childcare and healthcare workers, infection control procedures for healthcare workers.

But we termed such training stay in place training. That was that the training is required to stay in the current job, but it didn't necessarily lead to advancement. Low wage workers find it difficult to take advantage of other employer benefits that would support outside education and advancement. The employers did offer tuition reimbursement, but this really wasn't a viable option for most of the low wage workers in our focus groups because of the constraints with respect to time, money, and lack of confidence in their academic abilities.

On the positive side, the employers did use job shadowing, meaning having a new employee shadow a more experienced employee with a similar job, on the job training and mentoring to facilitate advancement. Particularly in the hospitality industry, workers can advance with limited formal training outside the workplace. In fact, some of the large employers in this industry prefer to develop their own training programs, because this helps to develop the brand identity to the style and service and attitude that they wanted to instill in their workers.

In conclusion, we learned a lot about industry structure, and the perceptions of both employers and workers. This information can be used to better inform workers and job counselors. The folder that we handed out with your packets provides and example of a way to try and improve this lack of information that workers and employers seem to have about the job opportunities. And the approach also helps to identify possible structural and market modifications that may improve career opportunities for entry level workers.

MR. LERMAN: Thank you, Nancy.

Before I open it up, I'd just like to say a couple of things. First, this meeting is a follow-up of a conference that we held last May on helping low skill workers, policies for the future. We will soon have a summary report from that conference, also some of the papers are available on the Department of Labor website, and you go to future work, and it lists papers from a variety of conferences.

Second, from my perspective on the substantive level, I think it's interesting to note that we have even in spite of a pretty weak vocational education system, and a weak apprenticeship system, we have a fair number of jobs in various skill categories that are not college oriented jobs. And it raises the question as to whether or not we ought to be doing what a lot of our other OECD countries are doing, which is strengthening vocational education, apprenticeship, skill standards and so on to upgrade these jobs even further, and to make people who are starting out more aware of the opportunities in these fields.

So with those two comments, I'll open it up for questions.

Yes, in the back. Wait for the mike and identify yourself.

MS. PATTERSON: Margaret Patterson, I work for the Washington office of the Port Authority of New York. I have two questions. One, how do you define—sorry, this is not my field—but skill and low skill, because looking at the list some things that I would consider— bricklaying, air traffic control, electricians—these are things I couldn't do. They seem to me to require a certain amount of skill. And the other question is, have you seen any impact on the number or type of jobs because of the advent of e-commerce?

MS. PINDUS: I don't know if there's anyone here from BLS that could explain better how they came up with their skill requirements. Basically, what the Bureau of Labor Statistics has done is look at the characteristics of the workers who are holding those jobs to characterize the typical qualifications of people for those jobs. It's not a precise way to come up with these skill requirements, but it's based on the characteristics of people who currently hold those jobs. So that's where the skill levels come from. But, you're very right. I don't think it's air traffic controllers. It's more like it's airline, airplane mechanics and truck mechanics, but certainly not the higher tech businesses.

I didn't see any specific occupations on BLS's list that would—that related to e-commerce or any Internet activity except for webpage managers, and that is not a low skilled job. So we think that a lot—and Bob might want to say something more about the information technology sector. But many of those jobs are not low skilled jobs.

MS. PATTERSON: [Inaudible.]

MS. PINDUS: Harry?

MR. HOLZER: I think it's too early to know. In some sense I have the—I have the sense that the e-commerce—the volume of e-commerce has risen dramatically only in the last—certainly within the last 12 month period. So it's really too late to show up in any of the BLS projections, or any of the BLS data on recent trends. Where it might be expected to have some affect over the next five to ten years is exactly where you say, maybe less direct sales jobs in retail establishments, but of course at least until now those have been big growth areas. It's just too early to tell how much that will be changed by this, I think.

MS. PINDUS: We also think that some of those jobs that would be, say, either at online retail, or call in centers, those are not high skilled, nor are they high paid. So it might be transferring from the in-store retail employees to similarly low skilled jobs that might have some opportunity outside of metropolitan areas. So, for example, we're seeing around the country a new business development, which is call centers, because of e-commerce and telecommunication they can set up their establishments outside of metro areas, which is really providing some opportunities for rural and non-metro low skilled workers that they didn't have in the past.

MR. LERMAN: Excuse me, I think you've put your finger on a very important point, which is that in this country when we talk about skill and education we often use those terms interchangeably, even though it's very inaccurate to do so. And one of the reasons is that the data are collected in such a way that there's no kind of standardized way of gauging a "high skill" person who has, let's say, low formal education. Now, if we contrast that with some other countries that contrast is quite striking.

Something that's going on in the United Kingdom, for example, for some years, it's got some problems but they're working on it is developing what they call national vocational qualifications. And that allows people to be classified in terms of another dimension rather than formal education, but still captures the kind of skill that we know is embedded in people who do very complicated jobs, but jobs that don't involve the kind of formal academic kind of education that we put down here as having a college degree. So I think you've put your finger on a very fundamental problem that affects both the training system, the way we collect data, and the way we conceptualize skill in the country.

Thank you.

Terry?

QUESTION: —part time employment is seeing very important indicators. But a third would be cyclical sensitivity. And in particular in the labor market if you look at the 1990s, you know, and you look at what's been growing, it's been coincidental with the general upswing in the economy. And so I think that many of the jobs, construction being the most outstanding, that that's clearly very sensitive. And the second thing is, I thought that Bob was going to hit this, in terms of the measurement, you know, many of the jobs that the woman from the port authority mentioned, the idea of a bricklayer or whatever, they require manual dexterity, and that varies, and people have greater agility. And there are some measures of those characteristics for people, you know, in the NLSY and elsewhere.

MR. HOLZER: We don't collect them on an ongoing basis in a standardized way.

QUESTION: But, in terms of evaluating these jobs.

MR. LERMAN: Yes, right here.

MR. GRADY: Bill Grady with Congressman Brad Sherman's office. I guess what I missed perhaps in all of this was, it seems like you're portraying that there is not a job gap out there anymore, that there are enough jobs for low wage workers, unemployed, and welfare recipients, and that what we need to do is help fit them into the jobs that are out there. And as I was counting in your chart, there is an expected job growth of 722,000 good jobs, I guess that's over the next year, is it, or next—some period of time. There are, as I understand it, there are 16 million people working full time, year round, and below—not even the good job level, but at below the family poverty level of $8.21 an hour. And we focused on the low unemployment rate across a big spectrum of ages, I think 3-1/2 percent for all adults above 25 with a high school degree, but if you look at the most troubling, if you will, population when there's high unemployment, which is at the lower age levels, 20 to 24 year olds without a high school degree there is a 16 percent unemployment rate, which is fairly high, and you can get some problems when you've got a large number of folks without jobs. There's 1-1/2 million people who have been unemployed for over 15 weeks. So I guess that's a lead in to the question of, does your current research lead you to believe that there is still a job gap, and is there a place for public efforts to increase net employment, either private sector or public sector?

MR. HOLZER: I'll take a first stab at that, I'm sure others may want to comment. I think you're right to say that the complete demise of the job gap, reports of that demise may be a little premature. I think what Demetra said is generally true, that most workers who want to work right now can at least be hired. Whether they can be retained is another story. And there remain some workers in the populations we care about, such as current and previous welfare recipients, men with criminal records, et cetera, also people with certain kinds of disabilities, physical, emotional, et cetera, these are people that even under these circumstances are going to have some difficulty getting to first base, getting hired in the first place. And we can't pretend that problem no longer exists.

For people that don't fall into those particular problem categories, most of them can get hired, but I think you're right, if you look at—look at African Americans right now, the overall population of African Americans the unemployment rate bounces around a little bit, it's been averaging about 8 percent. When the overall country has 8 percent unemployment that's considered a very serious recession. And this is under the best of times. If you look at young workers, high school drop outs as Bob said, 6-1/2 percent, for high school drop outs that's very low. By most standards that's not an incredibly low unemployment rate.

So there are groups that continue to have some employment difficulties. There are areas that continue to have pockets of high unemployment. And there will be time periods. You know, we don't—I don't think anyone in this room believes that 4.1 percent unemployment is going to last forever. And when that next cyclical downturn comes, NBR might tell us that we're out of the recession after nine months or something like that, but it often takes several years for the aggregate labor market to recover. So for all those reasons, for certain groups and certain time periods and certain places, overall job availability, while it's much less of a problem than it's been in the last 30 years, it hasn't completely disappeared as an issue.

The other thing you talked about, really you might think of as a wage gap, wage or benefit gap, rather than a job gap. And there the answer is not strategies to create more jobs, but maybe strategies to either improve the jobs that exist, or improve the abilities of workers to get the good jobs that do exist, which is really everything that all of us have been talking about, abilities to improve skills, the sort of job matching and job retention process. And we can throw in, how do you take an existing job and make it better? I mean, there are policies like raising minimum wages, as long as—I don't want to use that term—as long as you believe the disemployment effects are small, or expanding eligibility for the earned income tax credit. And expanding healthcare coverage and childcare subsidies for groups that don't have it now. So those are all of the ways in which we can make the jobs that do exist pay a little better, even at the low end.

MS. PINDUS: I think you raise a good point, we really are just looking at one slice of this issue. And there are a lot of others, as well, including all the ones that Harry mentioned, including spatial mismatch. We know that in some inner city and rural areas that unemployment is very high. We know on Indian reservations it's still over 50 and 60 percent. We know for our inner city minority young people that employment is still a problem. We also know from the welfare reform analysis that's coming out that while over two-thirds of the former welfare recipients work at some point in the following year, not many of them are working consistently over that time period. So we may have a need for policy to think about how you fill the gaps when they're not working, so that if welfare is no longer a safety net, and if unemployment insurance, which only covers 30 percent of the unemployed, is not a safety net, then do we need a new policy that provides support, supplements, whether it's subsidized employment, government as employer of last resort during those periods of downtime.

I think what's important though, and what we tried to emphasize here, is that we have a really important window of opportunity right now to expand the number of low skilled workers who are moving into the labor market, and to make that experience as positive as possible, in terms of long term employment prospects, so that I think if we use this time well, we may begin to chip away at some of the problems that you talked about, which I think we all agree that they're there, as well.

MR. LERMAN: Just a quick point, I know we may not stay at 4.1 forever, we ought to go to 3.5. And I think we ought to be talking about it, because there are people who are so fearful of it, for reasons which are understandable based on past inflation behavior. But, there are a lot of indicators that suggest we may be able to go still lower. Just a second point, I think it's not worth mixing wages and income necessarily, because a lot of the people who have jobs that pay $8 or less, are not raising families, and are not heading a family, they're second and third workers in a family.

Okay. In the back here?

MS. KAY: Colleen Kay with HHS. I just wanted to say that while I think a lot of the numbers that are presented here are really encouraging, it's also important to point out that this is just the demand side of the story, and that it's important to keep in mind the labor side, the labor supply as well. And even if there are quite a few positions that maybe don't require a college degree or formalized training, if someone without those credentials is competing with a lot of other people who have them, they're still going to lose out. So it seems that it's important to keep that—and maybe during a tight labor market there's enough jobs for everybody, but once it gets a little more slack I think that could be an issue, as well.

QUESTION: This is related to Colleen's question. The 722,000 jobs are all jobs, as I read the table that Demetra passed out, and of those it looks like there are about 94,000 mostly truck driver jobs that require less than a year of training, and another 65,000 jobs that require less than a year. So you've got about 165,000 good jobs opening up per year for low skilled workers. And the question is, what's the supply of low skilled workers for those jobs?

MR. LERMAN: Wait, where are you getting those?

QUESTION: I made them up. No, the 722,000 is at the very last line on Demetra's—

MR. LERMAN: That's the total of all the good jobs.

QUESTION: Right. And then if you add up the starred jobs in the two lowest categories, those requiring less than a month, you've got all those truck driver jobs, 78,000 truck drivers, and 15,000 tractor drivers, or whatever. And then in the category—

MR. LERMAN: All the other jobs will be created, too, including the non-starred.

QUESTION: Yes, but the question is how many—what I'm trying to get at is how many good jobs are there relative to the supply of low skilled workers?

MS. PINDUS: Right, we talked about this yesterday, Bob, you have an answer.

MR. LERMAN: Oh, yes.

MS. NIGHTINGALE: He's ready. He's ready for this one.

MR. LERMAN: It turns out that for demographic reasons the educational mix of the labor force is changing in a surprising way. If you look at the adult labor force, say between 1992 and 1999, what you find is that the entry of people with high school and less education into the work force has only been enough to offset the people with high school and less who have left the labor force. So there's almost no net increase in the supply of adult workers with a high school or less level of education. I mean, it's amazing. I was shocked by it myself, because in this period you expect to draw in people as the business cycle matures, you expect to draw in the less educated, because the more educated have jobs in the first place. But, there is this demographic phenomenon that the group that's retiring and dying off have much, much less formal education than the group entering the workforce. And even though new of entrants maybe 55 percent have some college. Of the net change, counting both the leavers and the entrants, it's over 90 percent with some college, 94 percent with some college. So in that sense the prospects are modestly encouraging.

MR. HOLZER: If I could add to that, I think this is not really inconsistent with what Bob says. When I look at the numbers on educational attainment, and I think for the most recent cohort of high school graduates actually something like 65 percent enrolled in some kind of post-secondary education, and at least 30 percent of the total are expecting to get 4 year college degrees, so in terms strictly of educational requirements the supply side is not wildly out of line with the demand side. I think the problem to the extent the skill mismatch, if I can use that term, still exists, it's within those categories rather than between them, whether or not the college graduates coming out have the skills needed for the jobs opening up that require college. And similarly for within these different categories that we're talking about, of areas that may not require a college degree, may only require an associates degree or some other kind of certification, or even just good work experience, but all of those might be hurdles that are not met by the people entering and applying for those jobs. So it's not just overall quantity of education; it's other dimensions of skill that I think are problematic.

MR. LERMAN: Right. I agree with that.

Yes, right here.

QUESTION: —Both Demetra and Nancy mentioned the need for restructuring some jobs. Which are those jobs, and are they going to meet the demands of women, for instance, who now have fallen behind again with this new thrust to favor non-custodial fathers. Is there anybody out there that's worrying about what the effects on women may be?

MS. NIGHTINGALE: I'm not sure about the answer to your second question, about whether anybody is worrying about it or not. On the first part, in restructuring, we did encounter some programs that were trying to restructure both childcare industry and some of the long term particularly home healthcare worker type jobs. In childcare there is a lot of issues around zoning and the building side of it that would affect the cost of the building and the construction for the childcare center that would reduce the cost to the owner so that they could pay higher wages, and still be able to be a viable business. So there are things like that, in terms of zoning. There are some issues in terms of subsidizing the liability insurance that owners of childcare centers have to pay. So there are some initiatives in that direction.

What we saw in some of the home care jobs is ways to make them less of part time jobs, and more full time jobs, combining schedules, assigning workers to a building that had a large number of elderly residents, for example, so you could be on the job all day, rather than being traveling between jobs and not getting paid during those periods. So there are some efforts going on in that direction.

MS. PINDUS: There seem to be, and I don't think it's because anybody is consciously trying to improve the working opportunities for women, I think it has more to do with the tightness of the labor market, but there are beginning to be more programs around the country in the welfare to work grants program, there are a number that are trying to develop nontraditional employment opportunities in the building trades, especially. And the way that they're restructuring is working with unions to develop the training programs, on the job training programs, and also working with childcare policy to develop strategies that allow working mothers to take some of those jobs, which in the past have really been out of the question, when childcare and transportation had to be factored in. So we're seeing some of the restructuring happening, but we're not seeing it happen because they're trying to develop nontraditional jobs for women, but rather that there's a need for workers, and the supply of welfare mothers is one way that they're trying to seek that. So I think we'll see some interesting examples over the next couple of years.

MR. LERMAN: I'll go to this side, in the back.

QUESTION: I'm struck about the question of people getting good jobs. What people are we talking about, is there some criteria here, because obviously everybody can't get through the door at once, unless we raise the minimum wage, or get employers to voluntarily do it, and there's been some suggestion, and the last question may be mothers with children should be the ones that we decide should move up, maybe single men or not non-custodial fathers should stay down. Is there some normative judgment going on here as to who it is we want to move up?

MS. NIGHTINGALE: I think this is not a policy decision, but a labor market decision. And I think—I don't think we can develop a policy that would put one group ahead of the others. When we've tried with tax credits and the like that doesn't seem to work. So I think that our market structure is such that we have to respond to the labor market.

We're talking about the same queue, the same number of jobs, and just reshuffling the queue in some way. But there are an increasing number of programs, agencies, and intermediaries that are out there trying to work with the low-skilled population, whether its welfare recipients or economically disadvantaged, and now with the workforce investment act, and the one-stop career centers, there are many more opportunities for networking and providing the information that's needed to move into the labor markets. So, we're going to see that continue. But I don't know if anybody else wants to add to that, but I don't think we're talking about sort of changing the policy priorities or giving more priority to one group than another.

MR. HOLZER: The supply of good jobs is not necessarily fixed. And it's not even necessarily impervious to policy. Again, if you look at the way we structure out educational system, you find that it's very different from the way it's being structured in some other countries that do end up creating more high quality jobs. And so I think that's the first thing.

The second thing, though, I do think that you're right, that we shouldn't necessarily think that every low-wage job is a bad job given the circumstance that people might find themselves in.

MR. PENNER: Rudy Penner, the Urban Institute.

Bob noted how well wages were behaving in this expansion, but Harry suggests that employers were easing their skill requirements. And that would seem to suggest that wages per skill unit, if that's a concept, could be rising quite smartly. And yet, nothing bad is happening to productivity or to profits. Does that suggest that these previously required skills weren't important to productivity?

MR. HOLZER: No, I wouldn't be prepared to make that leap. Let me see if I can find exactly the hole in that logic. No, I think you can look at the last two or three years, and I think your hypothesis is probably—you know, it's only been the last three years, first of all, that we've had really significant real wage growth in the aggregate, of course, depending on how you adjust for CPI and all that, but real wage growth in the vicinity of 2 percent a year, and even higher at the bottom end because of minimum wage increases and things like that. We've had over a 20-year period this growth of skill requirements at the same time that the wages of high school workers and less have really stagnated. So, while the last two or three years have been good times for these workers, and employers are working hard to find workers with the requisite skills without sacrificing productivity, and by the numbers suggest so far that they've been able to do that reasonably well. But I think over a longer time period, I think the evidence clearly suggests that the skills matter, the skills are important, and the people that don't have them have been hurt.

You know, males with high school diplomas, again depending on how you adjust for the CPI, took a real beating over this 20-year period. And I think that skills are at least part of that problem.

MR. LERMAN: Let me just restate what I said earlier, but in terms of absolute numbers. There were something on the order of 13 million new adult jobs, newly employed people between 1992 and '99. Of that 13 million, something like 12.5 have some college. So employers are actually, in terms of the net people they're absorbing, again, we're not taking into account the skill component that we should take into account because we don't have good measures of it, but the one measure that we do have, formal education, suggests that the people that are flowing into these jobs on net have a good deal of education, and that may be one of the reasons why—I mean, that is where we would expect to see not just wage inflation, but wage inflation at relatively high wages that really influence costs in an important way. And because of this demographic phenomenon, we may have been lucky.

QUESTION: I'm tempted to ask really whether the one word answer to the question that's posed is yes or no after all this, along with a sentence to justify it. But let me raise a different question. And that is, you rightly have emphasized, Bob, that replacement of people with few skills as measured by education with people with more education have been really quite impressive over the years. However, it's also true that there's been a kind of stabilization in education levels reached, and presumably this process will come to an end. So, that raises the question, can we look toward a period when skill requirements measured in terms of education are going to stabilize. And, if not, what are we going to do then?

MR. LERMAN: No, I think you're right that the gap between the people who are going to be retiring over the next 10 years and the people coming in is a much narrower gap. And, therefore, this net phenomenon that I've been talking about will not be nearly as strong. And there, I think, we will perhaps have the kind of pressures that Rudy was talking about. But, again, I think that it tells us that we ought to really be, you know, strengthening our vocational education programs, apprenticeship programs, and so on.

QUESTION: You can import skilled workers as the programs of immigration have been taking place, as well as export the jobs.

MR. LERMAN: Yes, and we've been doing that as well.

MR. HOLZER: I think your question is also on the demand side of the market, will the demand for skills, especially college, continue to accelerate. And there's actually been a big debate among economists about whether the demand for some of those skills really accelerated in the '70s and '80s, or was it just continuing the same slope as previously. And my guess is more towards the acceleration. That's the only thing I can see that's really consistent with this widening of gaps. But, again, I think Bob has made this point, and I think it's correct, that the demand for college graduates is not exogenously determined, or not strictly determined by technology. In some sense, it depends on the skills that different groups being to the market. I mean, if employers really had confidence that high school graduates could read and write, much less think analytically a little bit, you know, that might level off the demand for college graduates. In the absence of seeing that evidence, the demand for college grows.

But I think Bob keeps coming back to other dimensions of skill and other kinds of training, and I think broadly speaking that's a correct point. You know, it's very important what skills the workers bring to the job market, and that's going to have a big effect on how employers hire to fill these positions.

MR. PECK: Ben Peck, Older Women's League.

My question is this, I'm sort of curious how long-term care ended up as one of the growth industries, or one of the good job sectors. My understanding is that turnover in this field is an impressive 100 percent per year just about. And so that would lead me to believe the reason it got on there is because if you stick it out for that first year, you might have a chance to rise up. Is that sort of—

MS. PINDUS: Well, there might be some confusion. It was selected for our study because of its growth. I don't think it's on Demetra's list of good jobs for just some of the reasons you just stated. But it's clearly because of the demographics, it's clearly a growth industry. And it becomes more of a growth industry for the lower education level because there's a switch really more down from the RN to the LPN to the CNA in terms of the staffing changes that are going on in long-term care facilities, so there are more jobs opening up at those lower levels.

MS. NIGHTINGALE: There are also some examples around the country of industry-driven career ladders in the long-term care sector. And where that's happening, where you've got a business, a long-term care facility working with a community college, so that you've got people going in at the entry level jobs, which may be home health care aides, or nurse aides, and then having the training being provided on-site. It's both reducing the turnover of their entry level positions which they say is a problem, and providing some opportunity for career ladders and moving up. So, we're seeing several examples of that around the country.

I think, again, part of it is demographically driven in terms of the demand on that sector, and some of it is because of the market, the tightness of the market, and the difficulty that those companies are having in finding entry level workers.

MR. PECK: And so, is it more than just the education then? Are there other services involved also, child care?

MS. NIGHTINGALE: Yes, right.

MS. ZUCKERMAN: Marilyn Zuckerman from the National Policy Association.

In analyzing the jobs and coming up with the good jobs, Demetra, in your work, particularly related to the wages, what percentage of those jobs are in industries that have high union representation, and are there any conclusions about the impact of unionization on wages and better jobs?

MS. NIGHTINGALE: I don't have a hard answer for that, but both that issues and the other one in terms of looking at the CIP with the characteristics of the jobs I think are areas where there should be more analysis on. If you just look at the list, you can see a lot of the sort of non-traditional female occupations, those are more likely to be unionized. So, in the construction trades, transportation, and operatives, manufacturing, those have higher unionization rates today. So, I would assume, hypothesize, that a lot of it is based on high unionization rates.

MR. HOBEN: Jim Hoben with HUD policy development and research.

I do a lot of work on homelessness, in fact just finished the work with Urban Institute putting out the big national report on homelessness. And something strikes me, first an observation, about the retirement from the workforce or death, as you said, Bob, of persons with high school or less education seems to roughly equal those coming into the workforce. And, from simply working in the homeless arena, I think there's a vast difference in those two populations, and the very important thing that this panel has mentioned with regard to jobs being available were three crucial conditions, if not more. One was good work skills and habits, and another, obviously, was some cognitive skills. And another one that was not mentioned until later, I think, by one of you, was freedom from obstacles, such as either alcohol, drug or mental illness disabilities, as well as other disabilities.

I would urge, I think the word when it was posed here, that are there good jobs for low-skilled or in terms of formal high school education, or a little bit more or little less, seems to me to be a pretty positive answer. What I'm really interested in, and I think it's a different study, but if there's any comment at this point, is this whole matter of looking at that remaining 4.1 percent, or whichever threshold, 6.4 percent of the population, and what is needed to qualify them for jobs?

And I would pose that as an absolute national priority if we're also going to avoid this issue of fairly soon seeing major wage inflation, at least in the lower middle ranks of income.

MR. LERMAN: We did have this conference last May called Helping Low-Wage Workers: Policies for the Future. We will have a summary document on that as well as references to people who can provide further resource. One of the big areas that we're seeing, and this follows on what Demetra was saying earlier about home care, one of the interesting things that came out of that was that a lot of the local community-based organizations that are most successful are those that are learning to deal with a particular industry sector so that whatever the people come with, those community based organizations realize that they have to have good knowledge about exactly what's necessary. They have to have a good working relationship with employers, have the employers trust them, in order to provide those opportunities.

And that then gives the workers in these programs some real incentives and some real feeling that they may have not just a job, but a future. And that's just one of the things that came out.

MS. NIGHTINGALE: I would also add that we have an opportunity to actually look at that population, whereas normally, in a normal labor market, we don't. And, again, with the welfare-to-work grants programs, despite some of the problems that they've had, there are a number of them that are targeting on the homeless, the multiple disability families, not only those on welfare but fathers. And in many cases, it really is a supported work environment that seems to be developing in conjunction with a business or an industry link that Bob was talking about. So, it would be supported work assignments in a particular industry. You see a lot of partnering with Goodwill Industries, and with vocational rehabilitation between the JTPA and workforce development system, the welfare system, and the folk we have that we have not seen before.

So, I think a lot of it is because of the strength of the economy that's allowing a focus to be placed on that very difficult population.

MR. LERMAN: With that hopeful sign, I think we will call this to a close. Thank you for your questions. Thank you for coming, and look for us next month.

Return to January 2000



Topics/Tags: | Employment | Poverty, Assets and Safety Net


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