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Improving economy leaves too many behind

Kevin Jordan

The word on the street is that the economy has rebounded and we have more people employed now than we did when the recession hit. That’s a milestone worth celebrating.

But, when I take a closer look at the kinds of jobs that exist today, I worry for the low-income neighborhoods still waiting to feel the relief of recovery.

We’ve lost several million manufacturing jobs in the last few years. And, while that certainly impacts the whole country, it hits poor communities especially hard.

One-third of residents in these areas rely on middle-skill employment, particularly manufacturing and construction jobs. Their communities are losing their top wage earners, and it affects everything from property values to neighborhood businesses to crime rates.

A New Kind of Job Loss

The job shift is not unprecedented, of course; we’ve been losing manufacturing jobs for more than three decades. But the recession accelerated that trend—not just because of outsourcing, as so often has been the case in the past, but because of an ever-increasing focus on productivity.

Businesses jittery about investing in a shaky economy sat on their capital through much of the recession, and now, with reserves to spend, they are automating rather than hiring. It costs them less to buy a machine to do the work of five men than it does to hire one worker to operate the machine. Machines don’t take vacations. They don’t need health care. They can work 24/7 without complaint.

I’m not knocking productivity, or suggesting business owners shouldn’t invest in their future. But we can’t ignore the downside.

We’re playing a game of labor market musical chairs.

When we produce as many washers, dryers, cars, computers and airplanes as we did before the recession, but with one million fewer workers, we’re playing a game of labor market musical chairs.

We’re losing good, middle-skill jobs that paid as much as $55,000 a year—enough to raise a family, even without a college education—and exacerbating our already-significant problem with economic mobility.

How can lower income families build a stronger financial outlook if they can’t move into better jobs?

The Skills Gap

There are some bright spots in the midst of the shift. Health care jobs, for instance, are growing, and many of them offer the chance to climb into the middle-class.

But they are not an equal trade off to what we’ve lost. Like many expanding fields, upward mobility in health care depends on continuing education and certification.

That can be a challenge for many lower income people who, already without strong academic skills, are hard-pressed to work full-time, raise a family and go back to school. It is difficult and expensive.

That’s part of why the “skills gap” has proven to be such a challenge. There are 600,000 existing jobs that businesses haven’t filled because they can’t find the workers with the training they need. Figuring out how to overcome that has to be one of our national priorities.

More Than Jobs

Government, nonprofits, business and philanthropy are all part of the solution, coming together to develop programs that recognize how all of this plays out in the real world. Given how hard it is for people to lift themselves out of poverty, it is in our national interest to keep them from falling into it in the first place.

The most successful programs do more than focus on jobs.

The most successful programs in that regard do more than focus on jobs. They help families build savings and stronger credit scores, help them figure out taxes and public benefits, connect them to remedial education services so they are in a position to consider higher tech job training, and even help them deal with the consequences of incarceration—whether that’s renting a decent apartment or finishing their GED or finding an employer willing to take a chance on them.

What makes all the services hang together, as we have found in our network of LISC Financial Opportunity Centers around the country, is long-term financial coaching so that people get help over several years if they need it, not just over a few weeks.

For most, the challenges they face run deeper than any short-term fix. The solutions should too.

It's All Connected

And that brings me back to the low-income areas most dramatically affected by all of this. Closing the skills gap is not enough for those places; the weight of the solution can’t rest on individuals alone.

In fact, even if we could fill the 600,000 open jobs tomorrow, we would still find ourselves behind in terms of pure number of manufacturing jobs from 2008. The simple fact is that we need more of that kind of employment, and addressing that need should be part of our overall strategy to reinvest in distressed places.

Good jobs, strong schools, vibrant commercial corridors, safe streets—they are all connected to each other.

Good jobs, strong schools, vibrant commercial corridors, safe streets—they are all connected to each other. They are the foundation for resilient communities that produce opportunities for families to advance.

Through LISC’s work across the country, we’ve seen first-hand what a difference that comprehensive approach can have. And success in our communities helps drive our national economic strength.

Let’s try to keep all of that in mind when next month’s labor statistics come out. We should, indeed, celebrate our economic recovery; it certainly has been hard won.

But let’s do it with a clear eye on the employment challenges we still face and expand public-private support for the programs that address it.

Kevin Jordan is senior vice president at LISC

A version of this story first appeared on the LISC website.


Posted in Family Income & Assets, Thinking Out Loud

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