Overcoming Barriers for the Underemployed

Overcoming Barriers for the Underemployed:Opportunities for Michigan to Grow, Leverage its Labor Force

Eric Lupher, President

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Citizens Research Council • Founded in 1916• Statewide• Non-partisan• Private not-for-profit• Promotes sound policy for state and local governments through

factual research – accurate, independent and objective• Relies on charitable contributions from Michigan foundations,

businesses, and individuals

• www.crcmich.org

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Thank You Report Funders

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Connecting the working poor to low-and medium-skill job opportunities

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Connecting Workers to Jobs

• Employers continue to report a talent shortage• Focus on skills gap is not satisfactory

• The majority of job openings tend to be concentrated in low- and middle-skilled jobs• Lack of occupational skill not the sole barrier to connecting job seekers to employers

• Michigan is home to a growing population of workers struggling to make ends meet

• Not able to find full-time jobs• Employed in a job that does not fully utilize their skills• Working in gray market

• State programs off target in addressing needs of today’s economy

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Demand for Workers

• Statewide demand for workers continues to grow• Number of jobs posted and available on the state’s website has nearly

doubled since 2012

• Bulk of job openings are for low- and middle-skilled positions

• Given the level of skill required, many of these positions are also low-wage

• Low-skilled, low-wage workers are less likely to have the personal resources needed to help overcome barriers to employment

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Categorization of Job Types by Educational Requirements and Time to Proficiency

Skill Level Minimum Education RequiredTime to Achieve

Occupational ProficiencyLow-Skill A high school education or equivalent On average, 2 weeks on the

jobMiddle-Skill Some post-secondary education or

trainingOn average, 1 year on the job

High-Skill A terminal post-secondary credential, bachelor’s degree or more

More than 1 year on the job

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The Demand for Workers

Projected Percentage Annual Average Job Opening Growth by Educational Requirement, 2016-2026

Projected Annual Average New Job Openings by Educational Requirement, 2016-2026

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0%2%4%6%8%

10%12%14%16%

0

50,000

100,000

150,000

200,000

250,000

Supply of Available, Job Seekers

• Even with ~386,000 job openings with minimal requirements…

• Michigan has >400,000 unemployed and underemployed individuals

• ~200,000 unemployed• ~200,000 underemployed

• Discouraged workers• Marginally attached to the workforce• Working part-time for economic reasons

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Michigan Unemployed and Underemployed Populations, Average Annual Rates 2003 to 2018

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0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Long-term Unemployed (15+ Weeks) Job Losers Discouraged Workers All Marginally Attached Involuntary Part-Time Employed

Can Michigan be at Full Employment with People Sitting on the Sidelines?• Two of easiest measures of strength of economy:

• Unemployment rate• Poverty rate

• These measures tell only part of the story:• Unemployment rate

• Measure of individuals who are both unemployed and actively seeking employment• Many people not actively seeking employment

• Poverty rate • $12,180 for individual, $25,100 for family of four• Not necessarily a livable wage

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Unemployment Rate

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Do not focus solely on the unemployment rate

Unemployment Rates in Michigan, Midwest States, and U.S. – 2007-2017

Labor Force Participation and Unemployment Rates in Michigan – 2007-2017

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0%

2%

4%

6%

8%

10%

12%

14%

16%

Une

mpl

oym

ent R

ate

Michigan

Midwest States

U.S. Average

64.2%

60.0%

61.4%

7.0%

13.7%

4.6%

0%

2%

4%

6%

8%

10%

12%

14%

16%

57%

58%

59%

60%

61%

62%

63%

64%

65%

Une

mpl

oym

ent R

ate

Labo

r For

ce P

artic

ipat

ion

Rat

e

Unemployment Rate

Labor Force Participation Rate

Michigan Labor Force Participation Rates, 2007-2017

Gender, Ethnicity, Disability Educational Attainment, Age, Poverty

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30%

40%

50%

60%

70%

80%

90%

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Male Female White Black Disability

30%

40%

50%

60%

70%

80%

90%

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

No High School Bachelor's DegreeAge 19-25 Below Poverty Line

Labor Force Participation RatesFor Michigan, Midwest States, and U.S., 2007-2017

54

56

58

60

62

64

66

68

70

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Labo

r For

ce P

artic

ipat

ion

(%) Midwest States

U.S. Average

Michigan

By county

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Michigan Labor Force Participation by Select Age Cohorts, 2007-2017

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0%

10%

20%

30%

40%

50%

60%

70%

80%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

20-24 55-64 Total

Health and Substance Abuse

Individuals Receiving Social Security Disability Income, Michigan, Midwest States, and U.S., 2007-2017

Overdose Deaths in Michigan, Midwest States, and U.S., 2007-2017

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2%

3%

4%

5%

6%

7%

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

SSD

IBen

efic

iarie

s as

% o

f Tot

al P

op

Michigan

Midwest States

U.S. Average

0

50

100

150

200

250

300

Ove

rdos

e D

eath

s pe

r 1,0

00 P

op

U.S. AverageMichigan

Midwest Average

Poverty Rate

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Generally the ALICE Population

•ALICE• Asset • Limited• Income • Constrained• Employee

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Michigan Unemployment Rate and ALICE Households, 2009-2017

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0%

5%

10%

15%

20%

25%

30%

2010 2012 2014 2017

ALICE Households

Unemployment Rate

Headwinds to Greater Labor Force Participation

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Number of Licensed Child Care Providers, 2010 and 2017

Category 2010 2017 ChangePercent Change

Child Care Centers 4,163 4,363 200 4.8%Family Child Care Centers 5,888 3,585 -2,303 -39.1%Group Child Care Centers 2,811 1,849 -962 -34.2%All Providers 12,862 9,797 -3,065 -23.8%

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Number of Child Care Slots, 2010 and 2017

Category 2010 2017 ChangePercent Change

Child Care Centers 297,834 313,692 15,858 5.3%Family Child Care Centers 34,949 21,397 -13,552 -38.8Group Child Care Centers 33,579 22,121 -11,458 -34.1%Total Slots 366,362 357,210 -9,152 -2.5

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Geographic Mismatch of Jobs and Workers

Average Annual Number of Unemployed per 1,000 Labor Force Participants, 2018 Online Job Postings by County

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Michigan and National Real and Nominal Wages, 2007 - 2016

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$12

$14

$16

$18

$20

$22

$24

$26

$28

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Michigan - NominalU.S. - Nominal

U.S. - Real

Michigan - Real

Rent Cost in Michigan, Midwest States, and U.S. Average, 2007-2017

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$600

$700

$800

$900

$1,000

$1,100

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Mon

thly

Ren

t Cos

t U.S. Average

Midwest States

Michigan

Call to Action

• Age• Policies that encourage young adults to stay in Michigan • Policies that bring in workers from outside of the state: domestic or

international migration• Childcare

• Advocate for state expansion of eligibility and amount of reimbursement• Employer provided facilities

• Geography• Bring workers to the job opportunities or• Employment opportunities where there are workers

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Call to Action• Health and Substance Abuse

• Affordable, accessible health care• Continue to provide resources for awareness and treatment of opioid

addiction • Housing

• Community issue – supply of affordable housing • Transportation

• Mass transportation plan, funding, implementation• Replicate Uber/Lyft models to supplement transit failings

• Wages• Employer issue – do pay scales attract/retain workers?

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State Policies

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Michigan Talent ProgramsDepartment of Corrections • Prisoner Education: Adult Basic Education (ABE) & General Education

Development (GED) • Prisoner Education: Career and Technical Education (CTE) • Prisoner Education: Employment Readiness and Workforce Development • Prisoner Re-Entry and Community Support • Vocational Village

Department of Education • Child Development and Care

Department of Health and Human Services • Business Resource Networks • Employment and Training Supportive Services • PATH • Vocational Rehabilitation (VR) • FAP Employment & Training Program (FAE&T) • Employment Assistance • Healthy Michigan

Department of Transportation • Michigan Wounded Veterans Internship Program (WVIP) • Veteran Internship Program (VIP)

Department of Licensing and Regulatory Affairs • Vocational Rehabilitation (VR) Services for Blind Persons

Talent Investment Agency • Adult Education and Family Literacy Programs • Food Assistance Employment and Training (FAE&T) • Partnership. Accountability. Training. Hope. (P.A.T.H.) • Trade Adjustment Assistance (TAA) • Disabled Veteran Outreach Program (DVOP) and

Local Veteran Employment Representative (LVER) Program • Wagner-Peyser• Workforce Investment and Opportunity Act • Going PRO (Skilled Trades Training Fund) • WIOA National Emergency Grants (NEGs) • Fidelity Bonding Program • Community Ventures • UIA: Work Opportunity Tax Credit • Various Marketing and Awareness Efforts • Career Exploration and Job Search Tools

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Restrictions by Source of Funding

• Majority of talent programs rely heavily on federal funding

• Specific requirements and limitations regarding

• Who they can serve• What services can be provided• Reporting metrics

• Funds often apportioned using unemployment rates

Federal Funding, $30.2

State Funding, $7.1

Going Pro

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Mismatch of Services

• Emphasis on• Job search• Job placement• Job training

• Fewer resources for• Work readiness• Work supports• Basic education

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Not All Populations are Being Served

• Programs targeted at• The unemployed• Those in or very near poverty• Specific sub-sects of the workforce

• Lose access to programs if income exceeds poverty rates or similar benchmarks

• Hard cut-offs result in employee attrition• Cycle of unemployment and public assistance

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Significance of Program Failings

• Current programs do not account for changes in the demographic and economic landscape that are impeding the labor market

• Success defined by • Declines in unemployment rate• Declines in number of households in poverty

• Focus on work search and occupational skill attainment as opposed to work supports and soft skills

• Fails to acknowledge the long-term, seismic shifts occurring in the labor market

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Call to Action

• Opportunities for Change• Expand Eligibility

• Measure Labor Market Health Differently

• Broaden Scope of Talent Strategy

• Coordinate Programs

• Multi-Pronged Approach

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