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TRANSCRIPT
Advancing Careers for Low-Income Families: Barriers, Opportunities, and Evidence
Alex Ruder
Georgia State Capitol
September 26, 2019
The views expressed are those of the presenters and do not necessarily reflect the views of the Federal Reserve Bank of Atlanta or the Federal Reserve System.
1. Foster payments innovation
2. Drive organizational agility
3. Advance economic mobility and resilience
by cultivating an environment with fewer
barriers and more opportunities for all
2
The Federal Reserve Bank of Atlanta Strategic Priorities
3
The Federal Reserve Bank of AtlantaSixth District
4
Economic Mobility by U.S. CountyAdult outcomes for children of low-income parents
5
Poverty Share by U.S. County
6
Patent Rates by Childhood Commuting Zone
Source: Bell et al. (2019)
7
72% of Small Businesses Report Hiring Difficulties
Source: 2018 Federal Reserve Banks’ Small Business Credit Survey
34% 38% 28%
Share of Firms Experiencing Hiring Difficulty for non-Bachelor's Degree Positions (2018)
Very difficult Somewhat difficult Not difficult
Reason Percent
Too few applicants 60%
Lack of job-specific skills, education, or experience
49%
Competition from other employers 41%
Lack of soft skills 28%
Lack of basic math, reading, or writing skills
21%
Difficulty passing drug test 20%
Difficulty passing background or credit check
16%
8
Reported Reasons for Hiring DifficultiesAmong firms hiring workers with less than a bachelor’s degree
Source: 2018 Federal Reserve Banks’ Small Business Credit Survey. 5% of firms report “other” as their response.
Workforce Development as a Driver of Economic Mobility
Workforce development programs are designed to
• enhance the job skills of individuals in order to increase their employability
• identify job opportunities• help job seekers obtain employment (GAO 2011)
By increasing earnings and employment opportunity, workforce development programs promote economic mobility.
The Healthcare Services Career PathwayA model for businesses and workers
Source: Loprest and Sick (2018)
Health Profession and Opportunity Grant Evaluation
(HPOG):
• Only 3% of new CNAs advanced to LPN or RN training (Loprest and Sick
2018)
• About 7% of participants earned multiple entry-level credentials (Loprest and Sick 2019)
• Barriers to advancement: “additional time and financial
investments, needing to combine work and school, and potential
child care needs.”
Do workers move beyond entry-level jobs?
What impedes career advancement?
Qualitative study of barriers faced by low-income adults in career pathways programs (Seefeldt et al. 2016):
1. Financial concerns: • Worries about day-to-day expenses, financing future
education, paying loans
• One unexpected bill or financial shock puts families in a “very precarious position”
2. Lack of time:• Concerns about how to fit training into an already busy
schedule
Notes: 123 interviews across 18 sites in the PACE career pathways evaluation. 12
$-
$5,000
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$6,000 $13,000 $20,000 $27,000 $34,000 $41,000 $48,000 $55,000 $62,000 $69,000
AN
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ANNUAL EMPLOYMENT INCOME
Net Financial Resources =(Income + Benefits) - (Taxes + Expenses)
Benefits Cliffs: A Basic Introduction
Source: The Fiscal Analyzer: see kotlikoff.net/wp-content/uploads/2019/03/Online-appendix-6-5-19-.pdf
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$6,000 $13,000 $20,000 $27,000 $34,000 $41,000 $48,000 $55,000 $62,000 $69,000
AN
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ANNUAL EMPLOYMENT INCOME
Net Financial Resources =(Income + Benefits) - (Taxes + Expenses)
Single mother of two children in Atlanta, GA
Childcareloss
Child Medicaid loss
SNAP loss
Adult Medicaid loss
Benefits Cliffs: A Basic Introduction
Source: The Fiscal Analyzer: see kotlikoff.net/wp-content/uploads/2019/03/Online-appendix-6-5-19-.pdf
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$6,000 $13,000 $20,000 $27,000 $34,000 $41,000 $48,000 $55,000 $62,000 $69,000
AN
NU
AL
NE
T R
ES
OU
RC
ES
ANNUAL EMPLOYMENT INCOME
Net Financial Resources =(Income + Benefits) - (Taxes + Expenses)
Single mother of two children in Atlanta, GA
Childcareloss
Child Medicaid loss
SNAP loss
Adult Medicaid loss
Benefits Cliffs: A Basic Introduction
Source: The Fiscal Analyzer: see kotlikoff.net/wp-content/uploads/2019/03/Online-appendix-6-5-19-.pdf
A Specific Case: Meet Leia
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Leia is a 25-year-old single mother.
She has two children, ages 4 and 6.
She is living in Atlanta, GA.
She works full-time earning about $8 an hour.
Leia receives public benefits and tax credits that are necessary to support herself and her family: food assistance, Medicaid for her children, Affordable Care Act subsidies, the Child Tax Credit, and the Earned Income Tax Credit.
A Specific Case: Meet Leia
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Leia has decided to become a Certified Nursing Assistant (CNA).
Her question: Should she continue down the pathway to the Licensed Practical Nurse (LPN) or the Registered Nurse (RN)?
The Healthcare Services Career Pathway
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A typical career guide shows a clear financial incentive for career advancement:
CNA Median Hourly Wage
$12
LPNMedian Hourly Wage
$20
RN Median Hourly Wage
$33
A Clear Financial Incentive to Advance
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$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50Age
Income After TaxesAge 25-50
Dollars, Annual
Source: The Fiscal Analyzer. See kotlikoff.net/wp-content/uploads/2019/03/Online-appendix-6-5-19-.pdf
LPN
CNA
In school
Concessions
Net Financial Resources—A More Complex Income Path
20
Note: Net financial resources = (Income + Benefits) – (Taxes + Expenses)
-$10,000
-$5,000
$0
$5,000
$10,000
$15,000
$20,000
$25,000
25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50Age
Net Financial ResourcesAge 25-50
Dollars, Annual
Source: The Fiscal Analyzer. See kotlikoff.net/wp-content/uploads/2019/03/Online-appendix-6-5-19-.pdf
LPN
CNA
In school
Concessions
Break-even line
Three Key Barriers to Advancement
21
Note: Net financial resources = (Income + Benefits) – (Taxes + Expenses)
-$10,000
-$5,000
$0
$5,000
$10,000
$15,000
$20,000
$25,000
25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50Age
Net Financial ResourcesAge 25-50
Dollars, Annual
Source: The Fiscal Analyzer. See kotlikoff.net/wp-content/uploads/2019/03/Online-appendix-6-5-19-.pdf
LPN
CNA
In school
Concessions
2. Low wage growth Break-even line
1. Unable to pay basic expenses
3. Smaller financial incentive for LPN attainment (relative to income)
Summarizing the Incentives for Career Advancement
22Source: The Fiscal Analyzer: see kotlikoff.net/wp-content/uploads/2019/03/Online-appendix-6-5-19-.pdf
-$20,000
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
3-year 9-year Lifetime 3-year 9-year Lifetime 3-year 9-year Lifetime
Concessions to CNA CNA to LPN LPN to RN
Net Benefit of Skill Acquisition to Leia: Short-Term Versus Long-Term
Net Present Value
Note: “Net benefit to skill acquisition” is difference in net with each career transition. ST= ages 25-33 and LT= lifetime.
Gains to the Tax Payer: Analysis of Leia Case Study
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-$20
$0
$20
$40
$60
$80
$100
$120
$140
3-year 9-year Lifetime 3-year 9-year Lifetime 3-year 9-year Lifetime
Concessions to CNA CNA to LPN LPN to RN
Th
ou
san
ds
Net Public Savings to Government Short-Term Versus Long-Term
Thousands of Dollars, Net Present Value
State
Fed
Note: Net public savings = Difference in Net taxes (lifetime taxes received minus lifetime benefits paid) with each career transition9 year period corresponds to when her children still need childcare
Gains to the Taxpayer: Evidence from the Arkansas Career Pathways Initiative (CPI)
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• Evidence from College Counts impact study (2017)
• ROI for 2009 cohort (n = 1,576)• $917,743 additional tax
revenue• Over $4,000,000 in public
assistance savings over five years
• Program cost of $1,142 per participant
• Every dollar invested in CPI leads to $1.79 return to the taxpayer over five years
Source: College Counts: Evidence of Impact (2017). Available at www.collegecounts.us/publications. Last accessed 9.14.2019.
Policy OptionsNational Conference of State Legislatures 2019 Report
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Aligning eligibility levels:
• Asset limits• Income disregards• Alignment of rules
1. How can alignment of TANF, SNAP E&T, and WIOA increase career advancement incentives and mitigate benefit cliffs?
2. “Asset Mapping” of Programs: Transitional TANF supports (childcare and transportation)
SNAP E&T (transportation)
WIOA supports while in training
Part of ongoing collaborative research with Administration for Children and Families Region 4
Applying the Continuum of Services Model
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$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
25 26 27 28 29 30 31 32 33 34 35
After Tax Income + Benefits, without Transitional TANF SupportsDollars, Annual
LPN, no transitional TANF
Source: The Fiscal Analyzer. See kotlikoff.net/wp-content/uploads/2019/03/Online-appendix-6-5-19-.pdf
Becomes CNA
Applying the Continuum of Services Model:No Transitional TANF Support
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Enrolls in LPN school; cuts hours as CNA to 20
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
25 26 27 28 29 30 31 32 33 34 35
After Tax Income + Benefits, with and without Transitional TANF SupportsDollars, Annual
LPN, no transitional TANF LPN, with transitional TANF
Transitional TANF period
Source: The Fiscal Analyzer:. See kotlikoff.net/wp-content/uploads/2019/03/Online-appendix-6-5-19-.pdf
Becomes CNA
Transitional TANF over, becomes LPN
Applying the Continuum of Services Model:The impact of transitional TANF supports
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Enrolls in LPN school; cuts hours as CNA to 20
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
25 26 27 28 29 30 31 32 33 34 35
After Tax Income + Benefits, with and without Transitional TANF SupportsDollars, Annual
LPN, no transitional TANF LPN, with transitional TANF
Transitional TANF period
Source: The Fiscal Analyzer. See kotlikoff.net/wp-content/uploads/2019/03/Online-appendix-6-5-19-.pdf
CCDF Subsidy Eligibility
WIOA Supportive Services Eligibility
SNAP E&T Eligibility
Applying the Continuum of Services Model:Asset mapping with transitional TANF supports, SNAP E&T, CCDF, and WIOA supportive services
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Note: arrows indicate points at which additional funding from SNAP E&T, CCDF childcare subsidies, and WIOA supportive services could provide additional financial support.
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Support transitions into entry-level employment and beyond
• Inform job seekers about benefits cliffs and promising career paths
• Align supportive services available to increase short-term incentives• TANF, SNAP, SNAP E&T, WIOA, foundations, etc.
• Reinforce the importance of business leadership
Federal Reserve Bank of Atlanta Resources
• Advancing Careers for Low-Income Families • www.frbatlanta.org/economic-mobility-and-resilience/advancing-careers-for-
low-income-families
• Center for Workforce and Economic Opportunity• www.frbatlanta.org/cweo.aspx
• Investing in America’s Workforce• www.investinwork.org
Discussion and Conclusion
References
Bell, Alex, Raj Chetty, Xavier Jaravel, Neviana Petkova, and John Van Reenen. “Who Becomes an Inventor in America? The Importance of Exposure to Innovation.” Quarterly Journal of Economics. 134(2): 647-713. 2019.
Government Accountability Office. “Multiple Employment and Training Programs: Providing Information on Colocating Services and Consolidating Administrative Structures Could Promote Efficiencies.” Report GAO-11-92. January 2011.
Loprest, Pamela and Nathan Sick. “Health Profession Opportunity Grants 2.0: Year Three Annual Report.” OPRE Report # 2019-64. Washington, DC: Office of Planning, Research, and Evaluation. Administration for Children and Families, U.S. Department of Health and Human Services. 2019.
Seefeldt, Kristin S., Whitney Engstrom, and Karen Gardiner. “Finances, Family, Materials, and Time: Career Pathways Participants’ Perceived Challenges.” OPRE Report #2016-28. March 2016.
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