A big bravo to Fredrik Andersson, Harry Holzer, and Julia Lane, for their book Moving Up or Moving On: Who Advances in the Low-Wage Labor Market, published by the Russell Sage Foundation. This book is among the few data-driven and market-oriented approaches to understanding the dynamics of the low-wage labor market, how workers most frequently transition out of low wages, and what sorts of policies would best encourage this same trajectory for low-wage workers overall. The findings support a “work-first” approach (which they note is facilitated by temp agencies) and explicitly highlight the need for more efficient means of matching low-wage workers to better firms and jobs.
Three Ingredients to Improving the Returns to Low-Wage Labor: Early Work Accumulation, Job Switching, and Identifying ‘Good Jobs’
Early Work Accumulation: Despite the criticism of temp agencies as a dead- end for welfare-to-work participants following 1996 welfare reform, the authors found that low-wage earners working through temp agencies did experience increased earnings in subsequent positions, even if wages earned through the temp agencies were low. Specifically, initially working for a temp agency was found to increase subsequent earnings by 6 to 10 percent (1). The authors note the importance of labor market intermediaries – temp agencies, non-profit placement organizations, etc. – in improving the quality of ‘matches’ between employers and employees by overcoming informational, geographic and attitudinal barriers(2). Further, they argue that this improved matching does not merely place some workers in good jobs while displacing others (assuming a world with a finite number of ‘good jobs’), but actually helps increase the overall supply of ‘good jobs’ by reducing employers’ costs associated with hiring and managing employees.
Job Switching: As discussed in a prior blog, the authors reveal the importance of job switching for low-wage earners looking to improve wages, noting that low-wage workers have a much better chance of increasing wages by changing companies than they do by staying with the same company and waiting for wage growth via tenure. A first job, according to this theory, provides a signal to other employers that the employee is work-ready and has the basic skills required by a particular position. What then becomes critical is this employee’s ability to market herself to another employer who is willing to pay more for her services.
Identifying ‘Good Jobs’: The authors find that economic benefits to job-switching are possible because wages and compensation policies differ significantly among firms, even firms within the same industry. What is illogical on the macro level (why would a firm pay more for the same labor?) has played out on the firm level (think Wal-Mart versus Whole Foods) as employers take a more self-enlightened approach to the costs of turnover, training, sick days, poor morale, etc. For a low-wage worker, this means that she may be compensated significantly higher by a different employer for doing exactly the same job she is already doing, if only she could easily locate that employer. The authors find that obtaining one of these ‘good jobs’ (jobs that pay higher wages and frequently offer more on-the-job training and paths for advancement) is the single most important factor in a worker’s ability to transition out of low-wages (3).
The positive effects of providing improved market data as to how firms compensate their low-wage workers are many. If firms that pay wage premia relative to competitors were systematically recognized and rewarded with the best employees (and consequently with lower turnover and HR costs), it is reasonable to assume that more firms would pay higher wages. Additionally, those workers in low-wage positions would have a transparent and much-widened path for advancement as they move across firms, not just within a firm. Finally, workforce development practitioners could begin to distill which employee attributes make low-wage workers most successful in obtaining and retaining ‘good jobs’, thereby dramatically improving the costly (and frequently ineffective) education and training programs currently provided to the hard-to-employ.
(1) Andersson, Fredrik and Harry Holzer and Julia Lane, Moving Up or Moving On: Who Advances in the Low-Wage Labor Market? (New York: Russell Sage Foundation, 2005), p. 100.
(2) Ibid, p. 145.
(3) Ibid, p. 105.
7.13.2009
Safety Nets - How to Incentivize Work When There Are No Jobs?
Barbara Ehrenreich, of Nickel and Dimed fame, raises the important point that 1996's welfare reform -- brought about to rightly incentivize work while discouraging dependence -- failed to imagine what our country's social safety net would look like in some distant future (at the time inconceivable) of high unemployment.
Suddenly, TANF and EITC benefits that are linked to work are available to only a tiny fraction of the population in need, as evidenced by relative stagnation in enrollment. Compare this with the rising ranks of those receiving Food Stamps, which are not tied to employment. Food Stamp enrollment has grown from a then record-high of 29.1million in July 2008 to 33.2 million in June 2009. This is ONE in every NINE Americans.
Ehrenreich also notes the changing perception of public benefits among individuals who were -- as recently as last year before losing their jobs -- middle-class. She describes their humiliation when going through a bureaucratic application process that requires finger printing in four states, and is more than likely to bring feelings of self-defeat in the remaining forty-six. Clearly we need to deter benefits fraud and incentivize work and independence, but it's worth exploring application and delivery channels that begin to help empower rather than merely running over the downtrodden once more.
A private sector solution perhaps??
http://www.nytimes.com/2009/07/12/opinion/12ehrenreich.html?_r=1&scp=4&sq=barbara%20ehrenreich&st=cse
Suddenly, TANF and EITC benefits that are linked to work are available to only a tiny fraction of the population in need, as evidenced by relative stagnation in enrollment. Compare this with the rising ranks of those receiving Food Stamps, which are not tied to employment. Food Stamp enrollment has grown from a then record-high of 29.1million in July 2008 to 33.2 million in June 2009. This is ONE in every NINE Americans.
Ehrenreich also notes the changing perception of public benefits among individuals who were -- as recently as last year before losing their jobs -- middle-class. She describes their humiliation when going through a bureaucratic application process that requires finger printing in four states, and is more than likely to bring feelings of self-defeat in the remaining forty-six. Clearly we need to deter benefits fraud and incentivize work and independence, but it's worth exploring application and delivery channels that begin to help empower rather than merely running over the downtrodden once more.
A private sector solution perhaps??
http://www.nytimes.com/2009/07/12/opinion/12ehrenreich.html?_r=1&scp=4&sq=barbara%20ehrenreich&st=cse
7.03.2009
"Less Educated Take the Worst Hit" - WSJ 6/7/09
The June 7 Wall Street Journal reported that the least educated are taking the biggest hit as unemployment numbers continue to rise, with the unemployment rate for workers over 25 who have not gone beyond high school rising to 10% in May, almost double the rate year-on-year. The picture is still bleaker for workers who haven't completed high school -- an unemployment rate of 15.5%, up from 8.4% last year.
The spread has stimulated demand for community colleges (remember when they used to accept new students??) and GEDs as employees try to fill gaps in resumes. Also notable was how acutely current job loss has hit less educated men over women -- construction and manufacturing jobs down with mild growth in education and health has meant that men have a jobless rate of 10.5% compared to women's 8.0%.
The spread has stimulated demand for community colleges (remember when they used to accept new students??) and GEDs as employees try to fill gaps in resumes. Also notable was how acutely current job loss has hit less educated men over women -- construction and manufacturing jobs down with mild growth in education and health has meant that men have a jobless rate of 10.5% compared to women's 8.0%.
6.22.2009
Hoispitality Institute featured in Miami Herald
Thrilled to see the Hospitality Institute featured in May 19th's Miami Herald! Check the link below for more information.
Kudos to Julie Grimes, Jeanne Westphal, Maria James, and all involved for their hard work on this great program.
WorkSquare is proud to be an employer partner of the Hospitality Institute and encourages other local employers to do the same!
http://www.miamibeginswithme.com/Hospitality_Institute/images/HospitalityInstitute.pdf
Kudos to Julie Grimes, Jeanne Westphal, Maria James, and all involved for their hard work on this great program.
WorkSquare is proud to be an employer partner of the Hospitality Institute and encourages other local employers to do the same!
http://www.miamibeginswithme.com/Hospitality_Institute/images/HospitalityInstitute.pdf
5.14.2009
Fast Company says "Hold the Interview"
Great article in this month's Fast Company mocking what they refer to as the "Official Hiring Process of America", which invariably culminates in the all-important interview. The final seal of approval. The intuitive capturing of that certain je ne sais quoi. The moment when interviewer peers into interviewee's soul and instantly -- as argues Malcolm Gladwell -- assesses work ethic, cultural fit, and latent potential....Or so we like to think.
Decades of research indicates that interviews are not predictive of on-the-job performance. Rather, they tell us how adept candidates are at - well, interviewing. Yet we continue to rely on them as the most critical step of the hiring process, in large part because we in the hiring world like to believe ourselves particularly skilled at it. Psychologist Richard Nisbett calls this the "interview illusion" -- the certainty that we're learning more from an interview than we actually are.
So how to tell if a candidate will stack up on the job? Fast Company recommends peer ratings, job-knowledge tests, even intelligence tests. But the number one indicator? A work sample. Potential salespeople need to make an on-the-spot pitch. Potential admins need to handle some incoming calls and give instant minutes of the meeting you've just had.
And when you're looking at a potential service worker or laborer, WorkSquare recommends inviting them for a working interview and have them actually do the work. Two days on the job and you'll have far more valuable hiring information (and at negligible cost) than eight hours of interviews could ever provide.
Decades of research indicates that interviews are not predictive of on-the-job performance. Rather, they tell us how adept candidates are at - well, interviewing. Yet we continue to rely on them as the most critical step of the hiring process, in large part because we in the hiring world like to believe ourselves particularly skilled at it. Psychologist Richard Nisbett calls this the "interview illusion" -- the certainty that we're learning more from an interview than we actually are.
So how to tell if a candidate will stack up on the job? Fast Company recommends peer ratings, job-knowledge tests, even intelligence tests. But the number one indicator? A work sample. Potential salespeople need to make an on-the-spot pitch. Potential admins need to handle some incoming calls and give instant minutes of the meeting you've just had.
And when you're looking at a potential service worker or laborer, WorkSquare recommends inviting them for a working interview and have them actually do the work. Two days on the job and you'll have far more valuable hiring information (and at negligible cost) than eight hours of interviews could ever provide.
4.07.2009
Earnings Growth and Job Mobility Among Low-Wage Workers
In The Brookings Institution’s article, “Encouraging Job Advancement Among Low-Wage Workers: A New Approach”, the author demonstrates that earnings growth for low-wage workers is much more likely to come from switching to a different company than it is from staying with an employer and waiting for a wage bump or promotion. If this is the case – and Miami-Dade’s dearth of mid-level jobs suggests that it would be particularly acute here – we would expect savvy low-wage workers to be putting in time at one job while eyeing where they could go next.
For a low-wage worker, even a modest increase in wages can make a significant difference in lifestyle and future prospects. Making $9.00 an hour instead of $8.00 is an effective raise of 12.5% and an additional $2,000 annually – enough to have a car that could get you to a $10.00 an hour job, or to enroll in classes for a marketable skill or certification.
So what’s inhibiting this upward mobility? Several things – all of which WorkSquare is working to change. First, little information exists as to available jobs, how to apply for them, what characteristics the employer requires, et cetera. When employers do post job positions publicly, they are often overwhelmed at the quantity of candidates (qualified and not) that they then have to sort through. I have seen more than a few hiring managers grab the top several applications and dump the rest in the recycling bin for lack of time. Accordingly, the search for a low-wage position becomes more about luck (or a personal referral) than it is about merit.
Secondly, the job search process in the low-wage sector remains costly and time-consuming when it involves juggling a current job, unreliable transportation, and family and other commitments. Scheduling time off for the interview and hiring process may well jeopardize a current position or be financially burdensome in terms of time spent, wages lost, childcare arranged, and transportation.
Third, we’re lacking reliable and standardized metrics for employee performance that would allow employers to target high-performers. Proxies such as job longevity exist, but all the same, it remains a challenge to ascertain whether a low-wage employee excelled or merely got by in prior positions. High turnover in low-wage retail and service settings means that references from supervisors or co-workers are frequently unavailable. Add to this the fact that online job boards – CareerBuilder, Monster, Craigslist, etc. – don’t provide effective ways to screen for available low-wage employees.
Finally, employees’ success in jumping jobs is inhibited by their own inability to market themselves well. Even when they have the experience or characteristics an employer is looking for, they may be screened out of the process due to an imperfect resume or professional appearance, or – most critically – their ability to give a convincing ‘elevator pitch’ to explain why they’re the best candidate for the job. Lack of interview experience can also be an impediment, as the interview setting can be sufficiently intimidating to make job-seekers uncomfortable and unable to put their best foot forward.
In sum, better information on available jobs and candidates is critical to helping both sides make more informed and successful decisions. Reducing turnover through intelligent hiring, along with successful retention strategies once employees are in place, has potential to save South Florida employers significant time and money. This, combined with an effective platform for low-wage workers to promote their employability and enhance their interview performance, would be nothing short of revolutionary. We’re working on it!
For a low-wage worker, even a modest increase in wages can make a significant difference in lifestyle and future prospects. Making $9.00 an hour instead of $8.00 is an effective raise of 12.5% and an additional $2,000 annually – enough to have a car that could get you to a $10.00 an hour job, or to enroll in classes for a marketable skill or certification.
So what’s inhibiting this upward mobility? Several things – all of which WorkSquare is working to change. First, little information exists as to available jobs, how to apply for them, what characteristics the employer requires, et cetera. When employers do post job positions publicly, they are often overwhelmed at the quantity of candidates (qualified and not) that they then have to sort through. I have seen more than a few hiring managers grab the top several applications and dump the rest in the recycling bin for lack of time. Accordingly, the search for a low-wage position becomes more about luck (or a personal referral) than it is about merit.
Secondly, the job search process in the low-wage sector remains costly and time-consuming when it involves juggling a current job, unreliable transportation, and family and other commitments. Scheduling time off for the interview and hiring process may well jeopardize a current position or be financially burdensome in terms of time spent, wages lost, childcare arranged, and transportation.
Third, we’re lacking reliable and standardized metrics for employee performance that would allow employers to target high-performers. Proxies such as job longevity exist, but all the same, it remains a challenge to ascertain whether a low-wage employee excelled or merely got by in prior positions. High turnover in low-wage retail and service settings means that references from supervisors or co-workers are frequently unavailable. Add to this the fact that online job boards – CareerBuilder, Monster, Craigslist, etc. – don’t provide effective ways to screen for available low-wage employees.
Finally, employees’ success in jumping jobs is inhibited by their own inability to market themselves well. Even when they have the experience or characteristics an employer is looking for, they may be screened out of the process due to an imperfect resume or professional appearance, or – most critically – their ability to give a convincing ‘elevator pitch’ to explain why they’re the best candidate for the job. Lack of interview experience can also be an impediment, as the interview setting can be sufficiently intimidating to make job-seekers uncomfortable and unable to put their best foot forward.
In sum, better information on available jobs and candidates is critical to helping both sides make more informed and successful decisions. Reducing turnover through intelligent hiring, along with successful retention strategies once employees are in place, has potential to save South Florida employers significant time and money. This, combined with an effective platform for low-wage workers to promote their employability and enhance their interview performance, would be nothing short of revolutionary. We’re working on it!
3.29.2009
Enabling Opportunity for Temporary Workers
The temporary staffing industry likes to market itself to job-seekers as a launchpad to permanent employment. Both traditional operators and Alternative Staffing Organizations (“ASOs”) operate under the assumption that temporary jobs increase an individual’s long-term job market prospects by providing job experience, on-the-job skill training, and an introduction to a potential employer.
Yet statistics on the long-term benefit of temporary employment at the lower end of the wage scale are mixed at best. In an article entitled “Temporary Agency Employment: A Way Out of Poverty?”, David Autor and Susan Houseman demonstrate that temporary employment did not improve the chances of escaping poverty over the long-term for a sample of welfare-to-work participants that they followed.[1] These individuals enjoyed a brief burst of additional income in the short-term, only to find themselves back at square one when their assignment ended.
This scenario is unfortunately all too familiar for low-wage job-seekers at labor companies and temp agencies. Add to this the fact that an estimated 15 to 40 percent of participants in government employment programs for low-income individuals go to work in this sector, even though the temporary help industry represents only 2 to 3 percent of the country’s total employment.[2] As a nation, we’ve managed to channel low-income job-seekers into the temporary sector as a band-aid solution, rather than figuring out how to turn these opportunities into a shot at long-term economic stability.
Why is it that most temporary jobs offer little future? For starters, many low-wage temp jobs are – by nature – only temporary. Laborers on a construction project or housekeepers in a hotel may only be needed until the project wraps up or high season ends. Second, traditional temp agencies impose a number of barriers – fees, minimum hours – that reduce employers’ incentives to hire on their workers. (Note WorkSquare’s “no temp-to-perm or minimum hour policy” – our way of encouraging employers to hire on and for workers to put their best foot forward.) Employers often think it more cost-effective to recruit low-skilled workers directly rather than incur fees, particularly when minimal training is required. Additionally, most temp agencies do not have the ability or the will to allow employer feedback in the selection process, leaving employers to gamble on the quality of employees they receive and reducing the likelihood of a successful match.
So, what can be done? How can we better turn temporary assignments into a path to prosperity for low-wage workers? How can we better ensure that temporary jobs result in permanent positions and long-term financial stability? How can we change the industry to incentivize good performance, reduce barriers to contracting between employers and employees, and allow for open access to information on the relative quality of temporary employees? Sounds complicated, but this is all feasible. It requires better tracking of longitudinal employee performance data; the provision of a platform from which employees can market their profiles to potential employers; and the inclusion of employer input in the selection of employees.
Third-party tracking and publication of performance data for temporary employees would enable differentiation among low-wage temp employees. All too often, high and pitiful performers alike have the same long-term job prospects because employers have no information with which to identify high performers, and employees are limited in their ability to effectively document and communicate their work experience and qualities. Differentiation would mean that high performers can be identified and recognized for their skills, work ethic, reliability, etc. (via temp agency and employer feedback), while low performers can also be identified and – ideally – targeted for skills training or other supportive services that can better help them succeed. Critically, employers will have the information they need to choose among an A, B or C team, and the option to pay wages commensurate with the quality of the employees they select.
Providing a standardized online platform for employees to market themselves directly to employers – utilizing the performance data discussed above as well as additional metrics – reduces the role of the staffing intermediary and allows employers and employees to capture value in the form of reduced fees and higher wages, respectively. With an online profile that outlines job history and performance, temporary employees are no longer at the mercy of temp agencies’ sales and matchmaking efforts. Rather, they can make the sell themselves, backed with third-party verified data and references, and market their services to a limitless audience of employers.
Finally, allowing employers to access performance data and play a part in selecting temp or temp-to-hire employees would greatly increase the probability of making a successful and long-term ‘match’ between employer and employee. Hiring managers who are unable to articulate the characteristics are skills that make employees successful within their organization may still be able to recognize these intangibles in candidates’ resume, profile or personal statement.
Yet statistics on the long-term benefit of temporary employment at the lower end of the wage scale are mixed at best. In an article entitled “Temporary Agency Employment: A Way Out of Poverty?”, David Autor and Susan Houseman demonstrate that temporary employment did not improve the chances of escaping poverty over the long-term for a sample of welfare-to-work participants that they followed.[1] These individuals enjoyed a brief burst of additional income in the short-term, only to find themselves back at square one when their assignment ended.
This scenario is unfortunately all too familiar for low-wage job-seekers at labor companies and temp agencies. Add to this the fact that an estimated 15 to 40 percent of participants in government employment programs for low-income individuals go to work in this sector, even though the temporary help industry represents only 2 to 3 percent of the country’s total employment.[2] As a nation, we’ve managed to channel low-income job-seekers into the temporary sector as a band-aid solution, rather than figuring out how to turn these opportunities into a shot at long-term economic stability.
Why is it that most temporary jobs offer little future? For starters, many low-wage temp jobs are – by nature – only temporary. Laborers on a construction project or housekeepers in a hotel may only be needed until the project wraps up or high season ends. Second, traditional temp agencies impose a number of barriers – fees, minimum hours – that reduce employers’ incentives to hire on their workers. (Note WorkSquare’s “no temp-to-perm or minimum hour policy” – our way of encouraging employers to hire on and for workers to put their best foot forward.) Employers often think it more cost-effective to recruit low-skilled workers directly rather than incur fees, particularly when minimal training is required. Additionally, most temp agencies do not have the ability or the will to allow employer feedback in the selection process, leaving employers to gamble on the quality of employees they receive and reducing the likelihood of a successful match.
So, what can be done? How can we better turn temporary assignments into a path to prosperity for low-wage workers? How can we better ensure that temporary jobs result in permanent positions and long-term financial stability? How can we change the industry to incentivize good performance, reduce barriers to contracting between employers and employees, and allow for open access to information on the relative quality of temporary employees? Sounds complicated, but this is all feasible. It requires better tracking of longitudinal employee performance data; the provision of a platform from which employees can market their profiles to potential employers; and the inclusion of employer input in the selection of employees.
Third-party tracking and publication of performance data for temporary employees would enable differentiation among low-wage temp employees. All too often, high and pitiful performers alike have the same long-term job prospects because employers have no information with which to identify high performers, and employees are limited in their ability to effectively document and communicate their work experience and qualities. Differentiation would mean that high performers can be identified and recognized for their skills, work ethic, reliability, etc. (via temp agency and employer feedback), while low performers can also be identified and – ideally – targeted for skills training or other supportive services that can better help them succeed. Critically, employers will have the information they need to choose among an A, B or C team, and the option to pay wages commensurate with the quality of the employees they select.
Providing a standardized online platform for employees to market themselves directly to employers – utilizing the performance data discussed above as well as additional metrics – reduces the role of the staffing intermediary and allows employers and employees to capture value in the form of reduced fees and higher wages, respectively. With an online profile that outlines job history and performance, temporary employees are no longer at the mercy of temp agencies’ sales and matchmaking efforts. Rather, they can make the sell themselves, backed with third-party verified data and references, and market their services to a limitless audience of employers.
Finally, allowing employers to access performance data and play a part in selecting temp or temp-to-hire employees would greatly increase the probability of making a successful and long-term ‘match’ between employer and employee. Hiring managers who are unable to articulate the characteristics are skills that make employees successful within their organization may still be able to recognize these intangibles in candidates’ resume, profile or personal statement.
These simple measures have potential to revolutionize the low-wage labor market and our country's understanding of the 'Working Poor'. It could make employees increasingly accountable for the quality of their job prospects, while saving employers immeasurable time and money through intelligent and cost-effective recruitment. At a very minimum, the aggregation and publication of low-wage temporary employee data is sure to challenge how our publicly-funded workforce development programs define success and require us to revisit how we can more effectively provide very low-income individuals with a real opportunity for prosperity.
[1] Autor, David and Susan Houseman, “Temporary Agency Employment: A Way Out of Poverty?,” Working and Poor: How Economic and Policy Changes are Affecting Low-Income Individuals, ed. Rebecca Blank, et al. (New York: Russel Sage Foundation, 2006) 312-337.
[2] Ibid.
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