How Can State and Local Governments Use Evidence-Informed Approaches to Improve Job Quality?
By Brianna Murphy
Most American workers have suffered from income inequality and wage stagnation over the last several decades. People of color continue to experience the most significant wage gaps and are bearing the brunt of economic and health risks during the pandemic. Recently, the media has highlighted employers that are struggling to fill vacancies, but some economists assert that the cause is a “wage and benefits shortage,” not a labor shortage.[i] Although the Federal government has recently approved trillions of dollars for recovery, job quality has been on the decline for decades. These pervasive issues require significant intervention outside of short-term, one-time legislation packages. Fortunately, there are many evidence-informed approaches state and local governments can take to improve job quality and, in turn, the quality of life of their residents.
Trends in Job Quality
A quality job offers living wages, consistent scheduling, legal rights, equity and inclusion, a supportive work environment, worker voice, and the opportunity to build skills and advance to higher positions.[ii] One of the main drivers in the decline in job quality is wage stagnation. Between 1979 and 2018, productivity grew by nearly 70% while wages increased by just under 12%.[iii] As wages and productivity decoupled, profit accumulation increased for businesses and those at the top of the wage distribution.[iv] The graph below shows how the bottom 90% of earners only received a wage increase of 23.9% between 1979 and 2018, while the top 1% and 0.1% saw increases of about 7 and 15 times that amount, respectively.[v]
Top 0.1% earnings grew 15 times as fast as 90% earnings
Cumulative percent change in real annual earnings, by earnings group, 1979–2018
Furthermore, blows to the labor market were not equitably distributed over the last several decades. While the gender wage gap has shrunken in comparison to previous generations, women still only take home an average of 85% of what men earn.[vi] Black workers made 79.2% of white wages in 2000, but the gap worsened by 3.6% as of 2019. Hispanic workers saw an improvement of 4.9% in this time, but still only made 74.6% of white earnings in 2019. These unacceptable gaps in earnings demonstrate how much work there is to be done to improve equity in the job market.[vii]
According to David R. Howell, Professor of Economics and Public Policy at The New School in New York, one way to measure job quality is on the continuum of what he calls “lousy, decent, and good jobs.” The cutoffs for lousy, decent, and good-wage jobs are $13.33, $17.44, and $26.16 respectively (as of 2017).[viii] Howell’s report defines lousy-wage jobs as those that can support a single, full-time worker at a near-poverty level. Decent jobs allow single workers to escape poverty permanently,[ix] and good jobs pay enough to support a single adult with one child in many (but not all) cities, as seen in the table below.[x]
Wages Needed to Support a Single Adult with and without One Child in Different Cities
Howell also shows that job quality has fallen since the late 1970s. The percentage of decent wage jobs for all workers declined from 60.4% in 1979 to 54.8% in 2017,[xi] but workers without a college degree were hit the hardest with a 23.7% decline in decent wage jobs.[xii] Job quality encompasses more than just wages, though. Over the past four decades, health and pension benefits from employers have dropped by about 36% for the bottom fifth of earners, compared to only 18% for the top fifth of earners.[xiii] About half of low-wage workers have no say in their work schedules, creating unstable earnings and an inability to plan for other important obligations, like child care.[xiv] Furthermore, low-wage workers switch jobs more frequently and tend to transition from one low-wage job to another without wage advancement.[xv] This suggests a lack of advancement opportunities in the low-wage job market.
The aforementioned trends all took place before the world-changing COVID-19 pandemic. The pandemic has changed work for everyone, but it has especially taken a toll on the most vulnerable workers, shining a light on the state of job quality in America. Lousy-wage jobs are most common in the food, retail, cleaning/maintenance, and personal care industries.[xvi] Due to social distancing requirements and a limited ability to shift to telework, workers in these industries faced the highest rates of unemployment in 2020.[xvii] As shown in the chart below, 39% of low-income workers lost their jobs or were laid off because of the pandemic. Low-wage workers who kept their jobs were more likely to be exposed to the virus. Sadly, many of these workers also experienced higher mortality rates due to the impact of poverty and structural racism on health outcomes; for example, Black Americans were three times more likely to die from the virus than white Americans in 2020.[xviii] As a result of these conditions, Black and Hispanic workers have been disproportionately affected by unemployment and other negative economic and health outcomes during the pandemic. Evidence-informed approaches to increasing job quality and equity can help close these gaps.
More than four-in-ten adults say they or someone in their house has lost a job or taken a pay cut due to COVID-19
% saying this has happened to them or someone in their household because of the coronavirus outbreak[xix]
Evidence-Informed Interventions to Improve Job Quality
Serious intervention is needed to address the decline in job quality in America, and equity should be at the forefront of any action. The list below offers state and local governments different evidence-informed approaches to boost job quality in their jurisdictions.
- Establish evidence-based requirements for workforce development grantees
● Results for America’s Moneyball for Workforce Development report provides recommendations for effective federal spending using evidence-based provisions, but can be applied to the state and local lenses as well. Key recommendations include:
○ Set aside funds (1%) for evaluation
○ Develop longitudinal data systems that integrate administrative data across agencies and allow for a single point of entry
○ Prioritize evidence of effectiveness in grants and contracts
○ Enhance robust workforce performance reporting (to include measures not just related to job placement, but also job quality and social outcomes)
○ Use outcomes-based contracting
2. Take measures to strengthen unions
The decline in unionization has contributed to the decline in job quality over time. In 1945, about a third of workers were unionized, as opposed to only about 10% of workers in 2019.[xx] Union members make on average 11.2% more than industry peers, and 94% of union members have access to employer-provided health benefits, as opposed to only 68% of nonunion workers.[xxi] Furthermore, strengthening unionization is an important tool in confronting wage inequality as women and/or people of color make up 65.2% of all unionized workers.[xxii] Despite the comparatively low rate of unionization today, about half of all nonunion workers said they would vote for a union if the opportunity arose. Part of this discrepancy can be explained by the legal and illegal efforts by employers to prevent union formation.[xxiii] Here are a few ways state and local governments can bolster unions:
● Increase enforcement and penalties for law violations by employers
○ In 2016–2017, employers were charged with violating laws pertaining to union elections supervised by the National Labor Relations Board (NLRB) in 41.5% of all elections. Violations included unwarranted firings, coercion, threats, retaliation, discipline, etc.[xxiv] Strengthening enforcement and increasing penalties on law-breaking employers will help empower employees to pursue and maintain unionization.
● Incentivize union membership; e.g. enable unions to have a public role in workforce training[xxv]
○ The membership organization and sectoral training program, Wisconsin Regional Training Partnership (WRTP), partners with unions, businesses, and workers to determine industry needs and provide workforce training and technical assistance for businesses. WRTP workers are 12% more likely to belong to a union and make about $6,355 more by being a member. Training is only two to eight weeks long.[xxvi]
● Allow independent contractors, temporary workers, and other workers who are not protected under the National Labor Relations Act (NLRA) to collectively bargain
○ The NLRA does not provide certain workers with the right to form unions and collectively bargain, including farmers, domestic workers, independent contractors, and other “gig” workers. States can provide these rights.[xxvii]
■ The State of New York passed the Farm Workers Bill in 2019.
3. Increase enforcement against labor violations
Wage theft from employers costs American workers at least $15 billion per year.[xxviii] Other employer violations include paying below the minimum wage, failing to pay overtime, forcing employees to work off-the-clock, denying meal breaks, making illegal deductions to wages, stealing tips, and misclassifying employees as contractors to avoid the minimum wage.[xxix] Preventing and prosecuting these violations is vital. To do this, state and local governments can:
● Increase funding for state and local labor agencies to better investigate and enforce labor violations.[xxx]
● Pass stronger whistle-blower protection and anti-retaliation laws for workers who report labor violations.[xxxi]
4. Raise the minimum wage
When the minimum wage increases, low-income communities’ poverty rates, racial wage gaps, crime, and welfare spending decrease. Evidence suggests that little to no job loss or hiring changes occur as a result.[xxxii]
● New York increased the minimum wage for fast food workers in a phased approach starting on December 31, 2015. The minimum wage was set at $15 per hour on December 31, 2018.
5. Create worker’s boards and implement job quality metrics
● Workers’ boards are composed of representatives for workers, businesses, governments, and the public to make recommendations for industry and occupation-related workplace standards. They can set wages above state or local minimum wage floors. Broad-based wage setting closes racial and gender wage gaps, decreases economic inequality, and encourages pay based on productivity.[xxxiii]
● The San Diego Workforce Partnership has published this useful resource: “How to Build Job Quality into Your Workforce Development Approach.”
● San Diego also piloted the use of Working Metrics, an analytics company with origins in the Aspen Institute that makes it easy for organizations to “measure, benchmark, analyze and score their job quality performance in comparison to their industry and regional peers, enabling them to improve company performance, drive more business, and attract talent.”
○ The San Diego Workforce Partnership used Working Metrics to internally measure and improve job quality, and as a way to evaluate potential service providers for Workforce Innovation and Opportunity Act (WIOA) contracts.
● Cincinnati’s Workforce Innovation Center, an offshoot of the Cincinnati Chamber, offers consulting services for businesses to retain and attract talent, create value for businesses, and adapt in a changing world. Among other services, it uses Working Metrics to measure job quality and equity.
6. Improve access to benefits
Offering benefits to workers plays an important role in hiring and retention.[xxxiv] State and local governments can influence benefit packages by requiring certain aspects by law. For example:
● Laws that require paid sick leave have been enacted in 13 states and Washington, D.C., including Connecticut, California, Massachusetts, Oregon, Vermont, Arizona, Washington, Rhode Island, Maryland, New Jersey, Michigan, Nevada, and Maine.
7. Encourage the formation of or transition to employee-owned businesses
Employee-owned businesses, which can take the form of Employee Stock Ownership Plans (ESOPs), Employee Ownership Trusts, or Worker Cooperatives, can generate more profits, pay workers better, and offer more benefits than traditional companies.[xxxv] Benefits of ESOPs can be found in the table below.[xxxvi]
Benefits of Working at an Employee-Owned Business
ESOPs pay formerly incarcerated employees an average of 25% more than typical companies, resulting in lower rates of recidivism.[xxxvii] ESOPs are also associated with higher job growth compared to the economy average.[xxxviii] State and local government initiatives that have incentivized the creation of or conversion to employee-owned businesses include[xxxix]:
● The Madison Cooperative Development Coalition: a city-funded initiative to form worker cooperatives that address income inequality and racial disparities by creating living wages and union jobs.
● Iowa and Missouri are reimbursing 50% of the cost of employee ownership feasibility studies and providing a 50% reduction in state income taxes on the ESOP’s stock sales.
● Colorado established a Governor’s Commission, which funds technical assistance for employee buyout and works to simplify the legal steps of the buyout process.
● Massachusetts funds a program to educate business owners about converting to employee ownership.
● In 2015, California adopted the California Worker Cooperative Act to make it easier to form a worker cooperative.
Improving job quality should be a top priority for government at all levels. Instead of waiting for federal action, state and local governments can use the tools at their disposal to improve job quality, positively impacting both the lives of their citizens and their economies. The bottom 90% of earners have suffered from wage stagnation and income inequality for too long, and too many Americans do not make living wages. It is time to usher in a new era of quality jobs that help increase economic, racial, and health equality for working Americans.
About the Author
Brianna is a Master of Public Affairs (DC Concentration) candidate at the LBJ School of Public Affairs currently working as the State and Federal Policy Apprentice at Results for America. She is interested in social policy, including labor policy, economic inequality, and housing issues, as well as sustainability. Brianna completed her Bachelor of Science in biology at the University of Wisconsin-Madison before transitioning to a career in public service. In her free time, Brianna enjoys singing, being outside, and hanging out with her cat, Daisy.
[i] Olson, Carly. “There’s No Labor Shortage — Just Not Enough Good Jobs.” Los Angeles Times, July 2, 2021. https://www.latimes.com/business/story/2021-07-02/labor-shortage-is-workers-crisis-as-covid-economy-recovers.
[ii] “Job Quality Tools Library,” Aspen Institute, October 29, 2020, https://www.aspeninstitute.org/longform/job-quality-tools-library/section-1-understanding-job-quality/.
[iii] Gould, Elise. “State of Working America Wages 2019.” Economic Policy Institute, February 20, 2020, 24. https://files.epi.org/pdf/183498.pdf.
[iv] Ibid., 6.
[v] Ibid., 25.
[vi] Ibid., 11.
[vii] Ibid., 14.
[viii] Howell, David. “From Decent to Lousy Jobs: New Evidence on the Decline in American Job Quality, 1979–2017.” Working Paper Series. Washington Center for Equitable Growth, August 2019, 20. https://equitablegrowth.org/working-papers/from-decent-to-lousy-jobs-new-evidence-on-the-decline-in-american-job-quality-1979-2017/.
[ix] Ibid., 16.
[x] Ibid., 17.
[xi] Ibid., 25.
[xii] Ibid., 8.
[xiii] Ibid., 27.
[xiv] Jones, Janelle. “Working People Deserve Schedules That Work.” Working Economics Blog (blog), June 20, 2017. https://www.epi.org/blog/working-people-deserve-schedules-that-work/.
[xv] Escobari, Marcela, Ian Seyal, and Michael Meaney. “Realism about Reskilling.” Workforce of the Future Initiative. Brookings, December 2019, 35-. https://www.brookings.edu/wp-content/uploads/2019/11/Realism-About-Reskilling-Final-Report.pdf#page=43.
[xvi] Howell, David. “From Decent to Lousy Jobs: New Evidence on the Decline in American Job Quality, 1979–2017.” Working Paper Series. Washington Center for Equitable Growth, August 2019, 9. https://equitablegrowth.org/working-papers/from-decent-to-lousy-jobs-new-evidence-on-the-decline-in-american-job-quality-1979-2017/.
[xvii] Kinder, Molly, and Martha Ross. “Reopening America: Low-Wage Workers Have Suffered Badly from COVID-19 so Policymakers Should Focus on Equity.” Brookings, June 23, 2020. https://www.brookings.edu/research/reopening-america-low-wage-workers-have-suffered-badly-from-covid-19-so-policymakers-should-focus-on-equity/.
[xviii] Ibid.
[xix] Parker, Kim, Juliana Menasce Horowitz, and Anna Brown. “About Half of Lower-Income Americans Report Household Job or Wage Loss Due to COVID-19.” Pew Research Center, April 21, 2020. https://www.pewresearch.org/social-trends/2020/04/21/about-half-of-lower-income-americans-report-household-job-or-wage-loss-due-to-covid-19/.
[xx] “Unions Help Reduce Disparities and Strengthen Our Democracy.” Economic Policy Institute, April 23, 2021. https://www.epi.org/publication/unions-help-reduce-disparities-and-strengthen-our-democracy/.
[xxi] McNicholas, Celine, Lynn Rhinehart, Margaret Poycock, Heidi Shierholz, and Daniel Perez. “Why Unions Are Good for Workers — Especially in a Crisis like COVID-19.” Economic Policy Institute, August 25, 2020. https://www.epi.org/publication/why-unions-are-good-for-workers-especially-in-a-crisis-like-covid-19-12-policies-that-would-boost-worker-rights-safety-and-wages/.
[xxii] Ibid.
[xxiii] McNicholas, Celine, Margaret Poycock, Julia Wolfe, Ben Zipperer, Gordon Lafer, and Lola Loustaunau. “U.S. Employers Are Charged with Violating Federal Law in 41.5% of All Union Election Campaigns.” Economic Policy Institute, December 11, 2019. https://www.epi.org/publication/unlawful-employer-opposition-to-union-election-campaigns/.
[xxiv] Ibid.
[xxv] Walter, Karla, and David Madland. “American Workers Need Unions.” Center for American Progress, April 2, 2019. https://www.americanprogressaction.org/issues/economy/reports/2019/04/02/173622/american-workers-need-unions/.
[xxvi] Naidu, Suresh, and Aaron Sojourner. “Employer Power and Employee Skills: Understanding Workforce Training Programs in the Context of Labor Market Power.” Roosevelt Institute, December 2020, 46–47. https://rooseveltinstitute.org/wp-content/uploads/2020/12/RI_EmployerPowerEmployeeSkills_Report_202012.pdf.
[xxvii] Wall, Malkie, and David Madland. “11 Things State and Local Governments Can Do to Build Worker Power.” Center for American Progress, February 9, 2021. https://www.americanprogress.org/issues/economy/reports/2021/02/09/495627/11-things-state-local-governments-can-build-worker-power/#fn-495627-38.
[xxviii] “U.S. Companies Are Stealing Pay from Low-Wage Workers, Report Says.” CBS News, May 4, 2021. https://www.cbsnews.com/news/wage-theft-us-companies-workers/.
[xxix] Cooper, David, and Teresa Kroeger. “Employers Steal Billions from Workers’ Paychecks Each Year.” Economic Policy Institute, May 10, 2017. https://www.epi.org/publication/employers-steal-billions-from-workers-paychecks-each-year/.
[xxx] Wall, Malkie, and David Madland. “11 Things State and Local Governments Can Do to Build Worker Power.” Center for American Progress, February 9, 2021. https://www.americanprogress.org/issues/economy/reports/2021/02/09/495627/11-things-state-local-governments-can-build-worker-power/#fn-495627-38.
[xxxi] Ibid.
[xxxii] Lempinen, Edward. “A $15 Minimum Wage Would Cost Jobs, Right? Probably Not, Economists Say.” Berkeley News, March 18, 2021. https://news.berkeley.edu/2021/03/18/a-15-minimum-wage-would-cost-jobs-right-probably-not-economists-say/.
[xxxiii] Wall, Malkie, and David Madland. “11 Things State and Local Governments Can Do to Build Worker Power.” Center for American Progress, February 9, 2021. https://www.americanprogress.org/issues/economy/reports/2021/02/09/495627/11-things-state-local-governments-can-build-worker-power/#fn-495627-38.
[xxxiv] Miller, Stephen. “Employees Are More Likely to Stay If They Like Their Health Plan.” Society for Human Resource Management, February 14, 2018. https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/health-benefits-foster-retention.aspx.
[xxxv] Abell, Hilary. “The Case for Employee Ownership.” Project Equity, May 2020, 12–13. https://project-equity.org/wp-content/uploads/2020/05/The-Case-for-Employee-Ownership_Project-Equity_May-2020.pdf.
[xxxvi] Ibid., 14.
[xxxvii] Ibid., 15.
[xxxviii] Ibid., 13.
[xxxix] Ibid., 33–34.
