This article was co-written by Brandon Roberts and David Altstadt on behalf of the Working Poor Families Project.
The Senate has unveiled a bipartisan proposal to cut payroll taxes for employers that create new jobs for out-of-work Americans. While the hiring tax break certainly has merit, the government must take bolder action to curb high unemployment of low-income working families who were already struggling to get by before the Great Recession hit.
America's low-income households are now facing levels of joblessness that are rivaling their heights in the Great Depression of the 1930s, according to a recent report (PDF) by the Center for Labor Market Studies. A staggering 30.8 percent of households with incomes below $12,500 tried but failed to find work during the fourth quarter of last year--more than five points higher than the overall unemployment rate at the peak of the Depression.
Other lower-income households earning below $40,000 are not faring much better. Their joblessness ranged from 12.2 to 19.1 percent, well above the national average of 9.5 percent for the fourth quarter. In stark contrast, wealthy Americans are barely feeling the effects of mounting job losses. Less than 4 percent of households with incomes above $100,000 are unemployed.
In pointing out this jobless dichotomy last week, New York Times columnist Bob Herbert asserted that Americans have to stop talking about the recession as if all of its victims were suffering equally and that all will be helped by some bland, class-and-category-neutral solution. Herbert called for bold, targeted government action to help lower-income households climb out of their deep unemployment hole.
Here are a few ways to get low-income families back to work and out of poverty. We've focused our jobs strategies on the construction industry because the federal government and states each year pour billions of dollars into infrastructure and capital projects, above and beyond current funding through the American Recovery and Reinvestment Act. The policy proposals are geared specifically to states, which oversee much public spending on construction.
For starters, any reemployment effort must address skill deficiencies because adults heading low-income households often lack the education and work experience to compete for career-track jobs (see our earlier post on the high unemployment rates of adults without a high school education). Particularly troublesome for the construction sector, few low-skilled, disadvantaged adults enter or successfully complete an apprenticeship, which is the tried-and-true approach for obtaining an entry-level job that leads to a highly-skilled, well-paid position as an electrician, mason, or highway maintenance worker, among other trades.
Unfortunately, most states have done little to support skills development programs capable of preparing low-income, low-skilled adults to work as an apprentice. States can provide much-needed resources to start-up or expand "apprenticeship prep" programs, by tapping public money spent on constructing roads, building schools, and private development projects. Missouri, Minnesota, and Wisconsin are among the few states that have taken advantage of a little-known policy by the U.S. Department of Transportation that allows states to use up to one-half of one percent of their federal highway money to fund apprenticeship prep programs. New Jersey has adopted the "half-percent" training policy for state-funded school construction projects. Other states should follow suit.
Next, states should ensure investments in skills development programs actually result in jobs for low-income adult participants. Several states have done this by encouraging--even, requiring--employers on publicly funded construction projects to hire them. Wisconsin offers highway contractors a wage subsidy for hiring graduates of its DOT-funded apprenticeship prep program. Other states have set hiring goals on projects, placing an expectation on employers to provide a certain percentage of work hours for low-income and disadvantaged individuals. Connecticut established a 30 percent goal for a series of redevelopment projects in downtown Hartford. Missouri set a similar hiring goal for highway projects in St. Louis and Kansas City. Both states have come close to achieving their ambitious goals.
However, it is not enough just to expand access to jobs on construction projects. States also must make efforts to improve the quality of jobs. After all, some residential builders, among other segments of the construction sector, have been known to exploit disadvantaged workers, in particular Latino immigrants. To guarantee good jobs on publicly funded construction projects, states should require employers to provide family-sustaining wages, health insurance, and paid sick days, among other benefits. This would build on prevailing wage laws active in 32 states. In addition, states should expect employers to invest in the skills development of their workers, such as offering on-the-job training opportunities and contributing funds to registered apprenticeship and prep programs. Illinois has set requirements for employers to participate in apprenticeship programs and to hire disadvantaged populations (specifically, minorities and women) for a certain percentage of apprentice jobs. Doing so would likely funnel public projects to construction contractors that have a track record for investing in the well-being and career development of their workers.
When adopted together, investments in skills development programs, hiring commitments, and job quality standards would go a long way to putting low-income, low-skilled adults on a path to good-paying construction careers. States can apply these policy prescriptions to other industries that they offer tax breaks and incentives. It is the sort of bold action necessary to immediately curtail high unemployment and depravity and to build a solid foundation for the future prosperity of low-income working families.
If we don't, America faces a grim future in which huge swaths of the population are left behind permanently. And, if Herbert's predictions hold true, the gruesome gaps in the condition of groups at the top and bottom of the economic ladder will lead to societal instability. For the good of the nation, it is time to act.
Brandon Roberts manages the Working Poor Families Project (WPFP), and David Altstadt is the author of the recent WPFP report: "Building Opportunity: How States can Leverage Capital and Infrastructure Investments to Put Working Families on a Path to Good Jobs." The report is available here.