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Seeking Prosperity: What Prevents Access to Middle-Income Jobs?

This is the second in a series of posts on improving economic opportunities for low- and moderate-wage workers in the Bay Area. How can we promote upward mobility for these workers? What stands in the way? To answer these questions, SPUR is working with a group of partners (MTC, ABAG, HUD, Working Partnerships USA, CCSCE, SMCUCA, Eisen|Letunic and the Bay Area Council Economic Institute) on an initiative called the Economic Prosperity Strategy. This series summarizes what we are learning.

There are numerous barriers for low- and moderate-wage workers (those earning less than $18 per hour) who want to move into middle-wage jobs (those that pay approximately $18 to $30 per hour). In crafting a regional economic prosperity strategy, we are drawing from several realities that inform our work to date:

  • There are not enough middle-wage jobs in the Bay Area for the workers that need them.
  • Many middle-income jobs have been lost since the economic meltdown and the competition for the jobs that remain leave low- and moderate-wage workers competing with people with more experience and education.
  • The more education you have, the more likely you are to earn higher wages. Educational attainment remains the biggest contributor toward upward mobility.
  • Housing costs disproportionately impact low- and moderate-wage workers in the Bay Area and have a huge impact on wealth accumulation. However, on its own, building more affordable housing does not produce upward income mobility.

Our last post looked at the commonalities between low- and middle-income workers and other wage groups. In this post, we focus on specific barriers affecting low- and moderate-wage workers. The goal of the Regional Prosperity Strategy is to provide a set of tools to help employers, workers, educational institutions and other industry leaders reduce impediments for those making less than $18 an hour to move up the career ladder. We focus on this group of workers because there is already a system in place to build upon, and therefore a greater chance of success. A different set of strategies will be needed to address unemployed individuals and those making significantly less than $11 to $18 an hour. The barriers that these latter groups encounter are persistent and systemic and will require coordinated strategies by industry leaders and policy makers over the long term.

The Economic Prosperity Working Group conducted more than 50 interviews and held 21 workshops throughout the Bay Area to gather input regarding the challenges to job opportunities and career advancement for low- and moderate-wage workers in the Bay Area. The workshops included labor representatives, workforce development leaders, community-based organizations, employers, workers, educational leaders and other stakeholders. Below we outline some the key findings from interviews we conducted across the region. The summary of findings is not exhaustive but is a reflection of the barriers most commonly mentioned.

Key Findings

1. Workers may have job skills, but they need experience to get hired into better jobs — and they often need to be paid to get the experience.

Low- and moderate-wage workers face a real conundrum when it comes to gaining the experience needed to access higher wage jobs. To get better jobs, workers need skills and experience on the job in any given sector. Without any financial support structure outside of work, low- and moderate-wage workers simply could not afford to take the risk of cutting back their work hours to engage in training or entrepreneurship.

There are some models that explore paid stipends for students. In an innovative partnership between Juma Ventures and SFMade, low-income youth receive direct work experience inside small, urban manufacturing businesses. YouthMade interns receive a grant-funded stipend and are covered by worker’s compensation.

There are fewer paid internships for adults. Programs like City Build in San Francisco offer participants paid workforce training and job placement for a career in the construction industry. Unfortunately, these types of programs have limited capacity to train large numbers of workers. It is important that programs and partnerships that offer paid internships be able train lots of workers in order to support the broad spectrum of low- and moderate-wage workers.

2. Basic skills and soft skills are as important as specialized skills.

Low- and moderate-wage workers often lack some of the basic the job skills needed to compete for higher wage jobs in a competitive labor market. The most significant skill gaps for low- and moderate-wage workers cited in our research are digital literacy, basic math, soft skills like critical thinking and communication, and job readiness skills like being able to show up to work on time.

Digital literacy programs like Job Scout use an online platform to teach job seekers the basic Internet skills to find a job. These are important models because most applications and skills training are available online, making them more accessible to currently employed job seekers. Organizations like Arriba Juntos assist workers with English as a second language skills that pertain to specific sectors like health care. These groups are most efficient when they connect trained workers to employers directly through established partnerships.

Beyond the basic skills, some programs focus on particular industry needs. In San Francisco “sector academies” provide training in specific industry skills (such as the computer programming language Javascript) that employers have identified as a need. One organization — Jewish Vocational Services—partners with specific employers to place its trained workers into actual job openings, creating a real pathway for job mobility.

3. The way workers search for jobs is changing, and social networks are increasingly important as a way to open up new opportunities.

The contemporary job search takes place online, and low- and moderate-wage workers are often disadvantaged when it comes to navigating these new systems. Even workers with smart phones, email and social network accounts may not be proficient in filling out online job applications. Data from the Job Scout program indicates that more than 20 percent of its users are young workers with insufficient digital literacy to successfully compete for many emerging jobs. Additionally, the social networks that high-wage earners enjoy are not often accessible to low- and moderate-wage workers. Opportunities for advancement are often informal and occur through personal connections. Utilizing platforms like LinkedIn for low- and moderate-wage workers could create opportunities for this part of the workforce to stay connected and share resources. One start-up, Work Hands, provides a platform for workers in the construction industry to show their portfolio and connect with work and each other.

4. Some skilled workers face barriers because of systemic issues like criminal background or immigration status.

Criminal backgrounds and immigration status are major barriers for low- and moderate-wage workers. Some programs like East Bay Works assist ex-offenders with job searches, but we know that the barriers for this population are systemic and really difficult to tackle. In order to reduce unnecessary barriers to employment for the one in four adult Californians with arrest or conviction records, Governor Jerry Brown has signed into law Assembly Bill 218 to “ban the box” and prohibit initial employment applications for local and state government jobs from requesting criminal record information. This is one response that provides a pathway forward for individuals to access the labor market.

Immigration status was one of the most frequently mentioned barriers across the region. Most recently,Governor Jerry Brown signed Assembly Bill 60, which will require the California Department of Motor Vehicles to issue driver’s licenses to undocumented immigrants who can prove their identities, have established California residency and pass driving exams. The law will go into effect no later than January 1, 2015. This represents an important milestone in reducing barriers for this segment of low- and moderate-wage workers.

5. Even those who overcome all the above barriers still need to drive because many jobs are far from transit, and the transit system itself fragmented.

Barriers related to housing, transportation and land use were seen as closely linked. The lack of affordable housing in many parts of the region may mean that higher paying jobs are far away from where workers can afford to live. While low- and moderate-wage workers tend to have shorter commutes, once they find a better job, they will often need to travel to the opportunity, increasing their transportation costs. Many jobs are not located near transit, forcing workers to drive or purchase an additional car to get to and from work. Locating more of the region’s middle-wage jobs near transit would mitigate some of this challenge. Local land use policy and coordination with transit systems can make the access to those jobs better.

Next Steps

Tackling the persistent barriers that low- and moderate-wage workers face in the job market is a difficult endeavor. The harsh reality is that thousands of workers are struggling just to support themselves and their families.

We believe that the broad goal of the Economic Prosperity Strategy can improve economic opportunities and establish clear pathways for low- and moderate-wage workers to achieve job mobility. This can happen through implementing innovative strategies at the local and regional levels, as well by identifying the needed strategies and policy efforts at the state and national levels. Streamlining and coordinating some components within existing systems of workforce development, training and education will go a long way toward creating a clearer pathway for low- and moderate-income workers to move into higher-paying jobs.

Read more about the Economic Prosperity Strategy on the SPUR blog:

How Do We Rebuild the Middle Class?

Seeking Prosperity: The Facts About Low- and Moderate-Wage Workers

Seeking Prosperity: Middle-Wage Job Opportunities in the Bay Area