Economic Development and Job Creation

Panelists:

Moderator:

Ruth Goins

Something john powell said was very appropriate: framing this conversation is partially about managing the creative tensions arising from varying points of view about some of the issues this conference is trying to address, and then hopefully discovering some common ground. The problem for this particular panel is that poor people, particularly poor people of color, are in one place, and the jobs, particularly the well paying jobs in high-growth sectors, are somewhere else. Given that we have the problem of mismatch between a robust economy (particularly in places like the Twin Cities) and deep poverty, must it be a both/and situation, or is either/or a possibility on the question of in-place and regional strategies?

Paul Jargowsky

One often hears comments such as “The problem isn’t the absence of jobs, it’s a culture of poverty.” We also hear about a “culture of dependency” fostered by government programs. The evidence from my work on that point suggests that other factors are involved. Of course there are social problems, but does culture lead to poor neighborhoods and cause the increase in urban blight? The evidence is very strong that the metropolitan opportunity structure has the greatest impact on these poor neighborhoods.

In the 1970s, in the northeastern and north central states, the levels of poverty concentration increased substantially, while those areas were experiencing economic hardship. Meanwhile, in the West and Southwest, areas that were booming economically, we saw enormous decreases in the concentration of poverty among blacks and Hispanics. In the 1980s, we saw a decline in the percentage of African Americans living in high poverty areas in the Northeast, while the economy of that region improved. When the oil boom of the West and Southwest went bust, we saw an increase in the percentage of African Americans and Hispanics living in poverty.

What are the determinants of the differences between cities in the level of ghetto poverty, and what are the determinants of changes over time in that? By far the most important determinant of poverty concentration is the levelof metropolitan income overall. These neighborhoods really are connected to the overall economic opportunity structure. Once I had accounted for the impact of the opportunity structure, and for changes in racial and economic segregation, I found that 80 percent of the differences between cities, and even more of the changes over time, can be explained. If that is the case, then there’s not a lot of role left for specific neighborhood factors like a “culture of poverty” or a “culture of dependency.” We understand what’s driving these poverty levels. The evidence is there that it really is jobs, wages, access to jobs, and patterns of racial segregation.

Steve Rothschild

Why are there so many economically poor folks when the economy continues to grow in this country, and unemployment is below 6 percent? Some people say there are not enough jobs to go around. Minnesota is creating 39,000 new jobs every year between now and 2000. There are an additional 51,000 replacement jobs that are open every year. The threat to our growth here is no longer a shortage of capital, but a potential shortage of qualified labor over the next twenty years. Are there enough livable-wage jobs? Not if everybody who is unemployed or underemployed had the skill levels to fill those jobs. We’re creating such jobs at a rate of increase of 17 percent a year here. There are now over 8,000 such jobs, paying over $10 an hour in the five-county metro area, going unfilled, and the number is growing each year. Many jobs have easy access to transportation and to inner-city residents, but they get filled by people who live elsewhere. The missing link, that doesn’t get discussed enough, is the number of people who lack marketable skills that allow them to fill living wage jobs, particularly among people of color.

How can this be, with the Twin Cities educational system, which includes remedial, alternative, adult, community, and technical programs? We recently tested over 110 people, mostly men of color, in accepting 60 new participants into our program. Though the group reported a surprisingly high average of thirteen years of education, their scores on the Adult Basic Proficiency Exam reflected achievement at the 8th grade level. This is understandably frustrating for these men. There are a number of job training programs, 140 in the area, spending some 90 million dollars. Most are short-term, low-cost, and lead to semi-skilled, mid level ($7-8 an hour) jobs. You can’t live in dignity on that. Many programs that spend or achieve more than that focus on women, even though, as William Julius Wilson points out, ignoring men impacts very negatively on their ability to form and support families.

We have to change the way we look at job training. The employer is the customer--not the government, not the client, not the philanthropist who is paying the bills. We have to go out and find what specific living wage jobs they have, and what skills these jobs require. These skills are generally not vocational skills, but personal, creative, interpersonal, and analytical ones: decision-making, conflict resolution, teamwork, clear communication, self-discipline. They’ll invest in vocational training for people with these qualities. Knowing how to learn is more important than what you know. Jobs change over time, people change jobs. We need to foster interchangeable job skills, and prepare people to think of and package themselves as a collection of skills.

We also have to select appropriate educational strategies. Many of the people we see didn’t do well in school. They may be kinesthetic learners, they may not be visual learners. Adults learn best when they can create their own meaning and learn experientially: learning to read by reading about subjects of great interest to them, for example. Finally, we have to invest for retention, not merely placement. Retention and promotion are what really count. We ought to be valuing long-term stability, not short-term churning. We ought to be changing the economic incentives by which we pay providers of these programs to focus on long-term outcomes. We ought to be raising the standards, so the industry will consolidate. Twin Cities RISE! is a relatively new program, focusing primarily on men of color, attempting to incorporate some of these principles. We’re in a pilot phase now, which will ultimately lead to a self-supporting business owned by its graduates.

James Head

What do you think is the fastest growing industry, in terms of creating employment opportunities, in the country today? (Audience/panel: health care, jails, retail, entertainment.) Somebody said it: temporary service agencies. That tells you something about the art and science in this area. We have to take a close look, and do a close analysis, of the industries that we would want to identify. It’s a proven fact, there’s a pretty uniform consensus, that income stability for families and individuals is a big part of improving the quality of life. My grandfather in Georgia used to say, “Don’t let anybody ever tell you that money brings misery.” His position was that money would make being miserable a little bit more bearable.

Individuals and families tell me that income stability allows them to make better, more informed decisions about education, housing, and services. To achieve that, we need a range of strategies. Entrepreneurial opportunities and small businesses are critically important (as is a recognition that seven out of ten fail in their first three years). Also essential is identifying growth industries, or sectorial intervention as we call it in our work, which is a process of really trying to identify the most promising employment opportunities. This process begins with working with the private sector to find out what skills are required, what the pay is, what the advancement opportunities are; then determining how to change the environment and education of our constituencies to meet the demands of better jobs. This requires partnerships among community colleges, employers, community groups, and others. It holds the promise, if successful, of placing large numbers of people in employment opportunities.

Working in different parts of the country, we have learned several things. Much of this work has to be individually tailored to people in particular communities. Time must be spent assessing individuals’ skills and interests, understanding what it is they want to do. There has to be a relationship with the private sector. They are beneficiaries of these programs, because they can cut costs by using them; so providers can, and should, work with them as equals. It also takes a real analysis of where the growth industries are. For example, surprisingly, the health care industry has pulled back to see what will happen, it’s actually downsizing. Now the buzzwords are telecommunications and biotechnology. I’m not an economist, and I don’t know what some of these things mean, but if those are the jobs of the future, we at least need to understand what they are, and whether there are any opportunities there for poor people.

Lastly, anything we do has to be accompanied with support systems. We’ve got to deal with the child-care issue, the health care issue, with transportation, and with keeping families intact. Sometimes we segregate these things, without a notion that there are these fairly serious connections among them. If we really are looking at livable wages, and looking at sustaining families and individuals, those have to be there.

My response to Steve’s figure of 90 million dollars for job training in the Twin Cities area is, “Is that enough?” Our experience has been that it is really difficult to put a per person dollar figure on job training. Even the standards that the federal government has come up with look very low to me. I think what we’re talking about is something much greater than what anybody has estimated. If you look at the return, however, an individual that is in the job market over a long period of time, paying taxes, building equity, creating stability, then I think any cost that is there is going to have been well spent in the long run.

Avis Vidal

Paul Jargowsky started us off on a pessimistic note: after accounting for the macro (about 80 percent) there’s not much for people in this room to do. Unfortunately, I tend to agree, because when markets work, they are very powerful agents. Small amounts of resources swimming upstream of powerful, well-functioning markets are likely to get washed downstream. When we think about the role of place-based, community-oriented, locally grounded economic development activities, the tack to take is not how to fight markets, but how to correct markets that aren’t working, and how to get markets that are working, to work for “us.” In the current economy, there seem to be lots of markets that aren’t working that well for lots of people: that’s what corporate downsizing as a national pastime is all about. Everybody is getting less secure, but that doesn’t mean that poor communities and communities of color shouldn’t be in that marketplace, however well or ill-functioning it is, on the same terms as everybody else.

I’m always uncomfortable with the “job creation” term: most of it is really robbing Peter to pay Paul and only counting half the equation. Real value added is getting people or other underemployed resources, such as real estate, and putting them back into full employment. We’re all after the 5 percent solution, that we can put down almost anywhere, and get a return. Individualized worker/employer assessment is the kind of work that can be, and often is, done well by neighborhood organizations. It is responsive, close to the ground, benefits by close knowledge of the community, and at its best, views people in their own context. James Head raised the issue of child care. We know very little about what it costs an individual, what it costs a community, to get somebody into a job, or what value it brings a community. We were asked as panelists “What is it that community based organizations can do to make sure that poor people get good paying jobs with full packages of benefits that they keep over the long term?” If you can’t meet that goal as a CBO, it doesn’t mean you’re not making a valuable contribution. It is very discouraging for an individual mother to take a low-paying fast food industry job, work there for a couple of years, and then return to welfare. Yet that decision on her part is perfectly understandable. So, often one feels that getting someone into that type of entry-level job represents a failure.

There was a reference this morning to Gautreaux, in which low-income people in Chicago were moved out to the suburbs. Everyone thinks it is fabulously successful in terms of long-term impacts. Look at some of the short-term conditions: the moms are still isolated, and still poor, though they are slightly more likely to work. Their kids, however, finish school and go to college. If you ask, “Did we meet our aspirations with respect to this mom?” No, we probably didn’t. Did we accomplish something worth doing? We very well may have, if we follow it through. When I was young, it was my mother who helped me follow through on my goals and responsibilities. With families fragmenting, it is often CBOs who play that coaching, counseling, encouraging role. The groups that are accomplishing the most at permanent placement are those that are adept at understanding their own communities, which allows them to vouch for someone, and provide support and follow-up if the person is treated unfairly at work. This is customized, labor-intensive work. In the olden days it was unpaid “women’s work,” but it’s what it takes to make the difference, and it’s exactly the kind of thing that a community-based approach can do.

On the issue of what it takes to fix markets: We heard one example from Ellen Burzynski. The South Bronx is the one I know best, where the housing was gone, and now there actually is a market there. Property assessments on non-assisted housing stock are going up more rapidly in the South Bronx than in any other place in New York City, because there’s finally a market there. The move to put shopping centers in inner-city neighborhoods is an example of bringing down food prices and bringing in jobs of very mixed qualities to a neighborhood that gets these communities served at high levels, and makes that community the sort of place that working and middle-class families might want to come back to. The real tension is less about micro vs. macro, than about how to decide how much energy to put into various strategies within a range.

Question and Answer Session

Goins: How do you find participants of Twin Cities RISE! Is there a role for community groups?

Rothschild: That’s a lesson we have learned. We invest over $20,000 per person, and expect about two-thirds of them to graduate. We think we will get a good return on that investment. We believe that we can improve people’s work skills, in addition to sending them to community colleges, providing for child care, and giving them a stipend as long as they meet their development goals. We also work with all kinds of community-based organizations, particularly spiritual ones. We take a holistic approach, and believe a person must develop in all realms. We want our graduates to stay connected to their communities, and CBOs have that potential.

Patricia Bray: One of the things discussed at the International Conference on Women in China was the lack of data with a gender perspective on poverty. Do you have gender-specific data? How do you take the gender consideration into your program planning and your analysis?

Jargowsky: The data I use is the census data, and it is collected on men and women and family structure. In fact I think we focus almost obsessively on the women, upon which all of our welfare reform efforts are focused. So in a way, it’s just the opposite.

Rothschild: Most of the money that is spent is anti-welfare, so it is targeted to custodial parents, who are often women. Twin Cities RISE! works with mostly men of color, because if they aren’t able to support families, it is much more difficult to lift women and kids out of poverty, regardless of any number of anti-welfare policies. The data is there, and we use it strategically.

Goins: Maybe we have lots of data, but not enough analysis. It’s not a non-issue by any means.

Question: What are your suggestions for changing the education system to improve things in this area? Are there one or two things we could do to get it better faster without breaking the bank?

Rothschild: We’re graduating too many people who aren’t competent, both from high school and from college. Add a competency requirement to the high school degree. This has been discussed, but not acted upon, because it requires that we teach a little differently. You don’t learn problem solving, for example, which is an important skill in work and in life, by being lectured to about the criteria for problem-solving. You learn it by doing it, and by asking questions. Many of our teachers are not prepared to work this way. It would require an enormous shift in the way people are prepared, in the way we measure things, and the values that we put into that. Otherwise, we’re going to continue to graduate people who, at best, know a little English or chemistry or math, but who can’t get along very well, aren’t very sociable, don’t work well in teams, don’t solve problems very well, and at the very least, can’t even communicate.

Jargowsky: Instead of evaluating schools on how many graduate, evaluate them based on how many go on to good jobs, or colleges. Focus on what we want them to do.

Question: In view of the problem of the multiplicity of programs, how can we in the community development field make the groups into a system?

Head: If we don’t hurry up and do some of that, it’s going to be done for us. The federal job training process/programs are either going to be seriously restructured or given over to the states in this whole devolution process. Some may think that state legislators know better than federal legislators how to make these programs fit and work. Some of us think that might not be the case. Many non-profit efforts depend on these programs. The place to start is with the consumer, the employer, to find out what they want, to reduce their training costs, and ensure that they will get long-term employees. That’s a critical part of it, and for many of us, it’s a real stretch from what we’ve done in the past. We have not had those kinds of meaningful discussions. That has to form the context. Lastly, we have had a serious amount of resistance from community colleges to changing their curriculum to move in the direction of skills development, education development that fits these industries. Part of that is that they are as institutionalized as many of us are, but unless we can get them to move, it’s going to be very difficult to put people into a meaningful system of education and training. So they have to be part of the discussion, and they will have to be pushed a little bit.

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