America's Workers Need More than a Minimum Wage Hike
With middle-class wages at an all-time low, the debate over how to best boost mobility for workers rages on. According to the Pew Research Center, wages for the average U.S. worker have been largely stagnant for four decades.
With nearly 40 percent of families with a minimum wage earner living below 200 percent of the federal poverty line, conversations on how to address the challenge unsurprisingly focus on raising the minimum wage. In July, the House passed a “long-shot” bill that would raise the federal minimum wage to $15 per hour. All but dead-on-arrival in the Senate, a cadre of lawmakers have, nevertheless, argued that the amount should be even higher.
Sadly lost in the debate is the reality that wage increases, alone, are unlikely to enable the sort of sustained social and economic mobility that proponents envision. If we are to make a lasting impact on the lives of American workers, raising the minimum wage is perhaps necessary, but certainly insufficient.
Workers need more than a new minimum wage: they need stronger investments in the kinds of training that will enable them to move into higher-paying roles. And they need it to happen on a nationwide scale.
Earlier this year, Jobs for the Future announced the winners of its Billion Dollar Challenge, which aimed to find new ideas to raise the annual wages of at least 100,000 workers by $10,000 or more by the end of 2021. The winning organizations — Cell-Ed Works and EMPath — focus on creating innovative ways to increase the wages of low-income workers through mobile-first career coaching and brain science-informed mentoring. Both are driven by the belief that today’s low-income workers can benefit greatly from training services that can provide them with the skills they need to advance beyond minimum wage jobs and other low-paying positions.
Such training should be highly flexible and accessible, as well as tailored to the needs of low-income workers. A 2016 analysis from the U.S. Department of Education and the Organization for Economic Cooperation and Development found that about 36 million adults in the United States are “low-skilled,” meaning they lack the skills necessary for meaningful employment. Other estimates put that number closer to 100 million, and the amount will only grow as technology continues to dramatically alter the world of work.
Up-skilling and training initiatives can change that, increasing the wages of today’s workers and preparing them for the in-demand — and higher-paying — jobs of tomorrow. The Department of Education and OECD analysis shows that for just one standard deviation increase in an average worker’s skills, their hourly wages increase by 28 percent.
Research suggests that as the social contract evolves, workers are increasingly expecting training to be an important part of their careers. A 2016 Pew Research Center survey found that more than half of the adults in the workforce today believe it will be necessary to receiving training and skill development to remain relevant during their careers. Some companies have already made major investments in training for their employees, AT&T has pledged $1 billion to provide 100,000 of its employees with training in cybersecurity, data science, and other technical skills. Earlier this year, Amazon announced it was spending $700 million on training for 100,000 of its employees through its Amazon Technical Academy, Machine Learning University, and other programs created by the company. Google has now partnered with 100 community colleges to offer an IT support certificate.
While these initiatives have been making headlines in recent months, they are not yet the norm. Businesses are seemingly training fewer workers today than they did in the past, and businesses that do offer training largely focus on workers who are already making higher wages, not those who could most benefit from up-skilling.
At the same time, federal investments in workforce development have declined over the past two decades. The federal government must step up to the plate, increasing essential investments in existing education and training programs. Policymakers should also consider new proposals for supporting skill development, from establishing lifelong learning accounts to allowing Pell Grants to cover short-term credentials.
As the debate over the minimum wage continues, we must remember there is more than one lever for increasing the earnings of today’s workers. And — absent concomitant and proportionate investments in skill-building — lifting the floor is not enough. We must work to provide employees with the training, coaching, and mentoring they need to move beyond low-paying, low-skilled jobs and toward a more secure career and future.
Maria Flynn, a former official of the United States Department of Labor, is CEO of Jobs for the Future.