Paths to Opportunity: Perspectives from Lower-Wage Workers and Their Employers

Joyce Foundation and Hitachi Foundation Partner with AP-NORC Center for Public Affairs Research

We are so pleased to share this announcement by the AP-NORC Center for Public Affairs Research of “America’s Lower-Wage Workforce: Employer and Worker Perspectives.”  This unique study, commissioned by the Joyce Foundation and Hitachi Foundation, captures the perspectives of lower-wage workers (earning $35,000/year or less) and their employers. It gauges their views on working conditions, opportunities for advancement, and experience with education and training.

The survey was conducted between August 2012 and January 2013. This was a period of continued anemic economic and job growth. Unemployment and underemployment remained exceptionally high despite 4 million job vacancies.  Those conditions continue to affect workers and their employers. 

As expected, lower-wage workers are less satisfied in their jobs than other workers. The AP reported on these findings. The first story is found at http://bigstory.ap.org/article/survey-low-wage-workers-gloomy-about-future.  A second piece is available at  http://www.npr.org/templates/story/story.php?storyId=174904680.  But results also reveal less obvious realities – ones that offer important direction to employers and employees who want to increase skills and productivity. There are also lessons for policymakers regarding job training programs and other workforce strategies. The main takeaways: 

• Most employers offer education and training to lower-wage workers.  Employers cite five business outcomes as the motivation for doing so.  
• Workers say they benefit most from on-the-job training and coaching provided by employers.  They cite on-line courses as least effective of the offerings from employers.
• A large share of lower-wage workers and their employers do not participate in training and education options available in their communities. Large shares of employers are not familiar with available programs.
• Employers know little about potential partnerships with publicly-funded education and training institutions. 

We highlight some survey findings and a few ideas for expanding advancement opportunities below. The full report can be found at: www.apnorc.org.  We look forward to hearing your insights and ideas.  Thank you.

Barbara Dyer, Hitachi Foundation President and CEO &

Ellen S. Alberding, Joyce Foundation President

WHAT WE LEARNED

Investment:  Most (88%) employers invest in skill development and training for their lower-wage workforce.  They do so mostly to improve product and service quality (69%); retain current workers (61%); and meet current skill needs (61%). However, only half of the employers (49%) are extremely or very confident that they will be able to invest in training current lower-wage workers to keep up with new technologies and skill requirements. 

Value: Most (83%) employers report that additional job training is very important for lower-wage workers’ career advancement.  But many lower-wage workers rate training and education as of lower importance. Half of lower-wage workers (49%) feel strongly that job training is important. Another 25% consider it moderately important with the other quarter (25%) assessing it as slightly or not at all important.

Offerings: Employers offer a range of training programs and benefits to their lower-wage workers (64% offer coaching and mentoring; 58% offer on-the-job training) but only 33% of employers offer benefits that lead to portable skills or education the worker can use to advance his or her career outside their current company. Lower-wage workers most value on-the-job training (70% found it was extremely or very effective) and least value on-line classes (39% found them to be extremely or very effective).

Participation: Public or government-supported training programs appear underutilized by both lower-wage workers and employers. Only 18% of lower-wage workers have used federal financial aid for students (Pell grants).   Fewer than 10% participate in any of ten other government-funded programs.  Similarly, 86% of employers have never taken part in a government-funded program. Of those that do, only a small minority (41%) engage with public-private partnerships.

Responsibility: Most workers (78%) and employers (81%) place most of the responsibility on workers themselves for career advancement. Responsibility is shared, however, as 73% of workers and 78% of employers believe that employers share at least a moderate responsibility for advancement. Fewer than half of lower-wage workers think government bears more than a little responsibility for helping workers move ahead. 

WHAT THIS MEANS

-          FOR EMPLOYERS

Employers gain from smart investment in their lower-wage workers.  But they could do more by expanding their own offerings, creating incentives for higher participation by lower-wage workers, and taking advantage of outside groups. More employers could benefit from and should explore potential partnerships with local institutions -- such as community colleges -- to offer education and training designed to advance their lower-wage workers.  For more information about these strategies, contact:

Aspen Institute’s Skills for America’s Future (www.skillsforamericasfuture.org)

                National Fund for Workforce Solutions (www.nfwsolutions.org)

Corporate Voices for Working Families (www.cvworkingfamilies.org)

The Manufacturing Institute (www.themanufacturinginstitute.org)

Precision Metalforming Association (www.pma.org)

Center for the Health Professions – (www.futurehealth.ucsf.edu)

-          FOR POLICY MAKERS

The public sector also needs to make smart investments in education and training for lower-wage workers. Policymakers should reform and better align government-funded programs with the needs of lower-wage workers and their employers.  More investment is needed in on-the-job training programs leading to credentials, as the evidence shows high return on investment. For more information about these strategies, contact:

National Skills Coalition (www.nationalskillscoalition.org)

Business Leaders United For Workforce Partnerships (www.nationalskillscoalition.org/the-issues/blu)

Many employers are investing in lower-wage workers. Here are two such stories.

Growing Opportunities in Minneapolis region – E.J. Ajax and Sons:

“E.J. Ajax and Sons is a real-world example of how manufacturers and community colleges partnering to invest in workforce development is a win-win-win,” said a White House spokesman in June 2011 in announcing an initiative to train and certify 500,000 U.S. manufacturing workers in the next 5 years.

The Minneapolis-based manufacturer is a testament to the link between workforce development and the business bottom line.  According to vice president and co-owner Erick Ajax (the founder’s grandson): “Since 1993, more than half of our frontline workforce either entered into or graduated from our apprenticeship programs.  Most Class A journey workers nearly doubled their entry-level wages as a result. Our bottom-line net profit remains several points above industry benchmarks due in large part to our ongoing efforts to upgrade the talent on the shop floor.”

Don Wellman illustrates the company’s savvy strategy. Wellman moved up from the frontlines as an $8/hour Class C punch press operator to become purchasing manager, an estimator, and a key account manager.  His rise included completing his Class A journey person training in 2004 and promotion to the front office as an estimator and key account manager in 2008. “My first couple of years here, I focused on becoming the best press operator I could,” says Wellman, “and quickly came to understand how much this company cares about its employees and their families.  Once I earned my journey workers card I began to look for other opportunities to learn and grow.” One such opportunity came when Wellman decided to teach at Hennepin Technical College for new classes in this field.  “I taught the metal stamping technician class,” Wellman says, “which really helped hone my people skills and certainly helps me now as I work with our suppliers (as purchasing manager) as well as with our frontline workers, trying to understand their needs.” Wellman vows to strengthen his skills in marketing and sales, and in fact already has a head start as he recently landed a new, big customer for the company.

Growing Opportunities in Baltimore – Biotechnical Institute of Maryland:

After losing her job as a mail operator, Caléche Arrington pursued a new path to success in the fast-growing biotechnology sector.  An East Baltimore resident, she could see opportunity blooming around her in the buildings sprouting in the bio-park in her neighborhood adjacent to Johns Hopkins Hospital.  She enrolled in skill training.   She first dedicated 12 weeks to advance her math skills, reading comprehension, and knowledge of the bioscience sector. That was followed by nine weeks of hands on, biopharma training.  A paid internship was her next step. She landed one at a large area bioscience company where she demonstrated her new skills and obtained job experience.  Just recently, Caléche accepted a full-time position with good benefits as a lab technician in the Sidney Kimmel Comprehensive Cancer Center at The Johns Hopkins School of Medicine.  Her salary alone is 63% greater than her highest past wage. 

The Biotechnical Institute of Maryland (BTI) partners with over 29 life sciences companies. They collaborate to meet employers’ needs for well-prepared staff and provide low-income adults with tuition-free lab training, college credit, and jobs with family-supporting wages and benefits.  BIOSTART is a 12-week starting point aimed at increasing basic skills and knowledge of the biotech industry. The Lab Associates training entails 9-weeks and leads graduates to a 100-hour paid internship and full-time placement in the industry.  BTI placed more than 80% of its graduates at an average annual salary of $25,000. 

ABOUT THE JOYCE FOUNDATION (www.joycefdn.org)

The Joyce Foundation supports the development of policies that both improve the quality of life for people in the Great Lakes region and serve as models for the rest of the country. The Joyce Foundation's grant making supports research into Great Lakes protection and restoration, energy efficiency, teacher quality and early reading, workforce development, gun violence prevention, diverse art for diverse audiences, and a strong, thriving democracy. The Foundation encourages innovative and collaborative approaches with a regional focus and the potential for a national reach.

ABOUT THE HITACHI FOUNDATION (www.hitachifoundation.org)

The Hitachi Foundation believes that business has an essential role to play in addressing the complex global challenges of our time. Through its three signature programs, the Foundation discovers, demonstrates, and expands business practices that improve economic opportunities for low-wealth individuals and enhance long-term business value. 

ABOUT THE AP-NORC CENTER FOR PUBLIC AFFAIRS RESEARCH (www.apnorc.org)

The AP-NORC Center for Public Affairs Research, a joint research initiative created in 2011 by the Associated Press and the National Opinion Research Center at the University of Chicago, combines the expertise of NORC, one of the world’s premier social science research organizations, with the reach of the AP, the global news network whose news reports are seen every day over all media platforms and formats by more than half the world’s population. The Center’s mission is to conduct rigorous research on key social problems and policy issues and to disseminate this research widely using the full power of the AP’s global reach, thereby providing insight for informed decisions. Underpinning the Center’s work is a strong emphasis on exploring the public’s behaviors, values, and desires and how the public wants its institutions to respond to these concerns.

###

Image: In this Dec. 1, 2011 photo, job seekers attend a career fair in Overland Park, Kan. The unemployment rate fell last month to its lowest level in more than two and a half years, as employers stepped up hiring in response to the slowly improving economy.  (AP Photo/Charlie Riedel)

In his August 4 column “Caterpillar to unions: Drop dead,” Steve Pearlstein argues that if Caterpillar were to invest in its production workers the way it invests in top management, it could lead to better corporate results. We can provide some evidence for that assertion. Over the past three years, our foundation has developed more than 70 case studies on what we call “pioneer employers” – companies in healthcare and manufacturing that make substantial investments in the training, education, and wages of their own front-line workers – and benefit their stockholders as a result. There are far more such companies than most people realize, and in many cases their stories are simply extraordinary.

For instance take the case of Pridgeon and Clay, a mid-size, non-union auto supplier in Michigan. Like many such firms, P&C was hit hard by the global economic meltdown – but has rebounded far better than most, growing from 400 to 650 workers stateside since 2009, and adding millions in annual revenues. Their secret has been to invest heavily in R&D and new product development – and to prepare, rather than replace, their workers when it comes to the impact of new technology. That’s accomplished with a home-grown Automated Press Operator training program, which provides wage increases of over 50% to employees who enter the program (and graduates receive even more). The firm also has a robust employee stock ownership program through which they share profits, and has provided generous tuition reimbursement to over 245 employees since 2005.

Stories such as that of P&C demonstrate that technological change and globalization don’t have to result in tragedy for workers. We can build a roaring, 21^st century economy that lead to better results for American workers and American shareholders. But we need visionary managers who can see past the next quarterly earnings report.