Developing the right skills to compete in growing employment sectors is critical to families and to local economies. But what really works to build up long-term financial stability? LISC’s Chris Walker takes a look at the outcomes of research on workforce development programs—especially those that bundle education, training and placement with a broader array of financial counseling—and finds compelling evidence for how to help low-wage workers move past employment barriers and into new opportunities.
I was thinking recently, as I watched the neighborhood kids on their morning parade to the elementary school down the street, that the late-summer drumbeat of “back to school” is a powerful metaphor for adulthood.
In one way or another, we are constantly sharpening our skills and building new capabilities. Many of us are lucky to have mentoring and continuing education programs to support that growth. They help us open new doors, both personally and professionally.
I wish the same were true for unemployed and underemployed workers. Half the American workforce earns less than $15 an hour, and more than 75 percent of low-wage workers lack the technical skills they need for better paying jobs. But there are too few resources to help them develop their talents. Indeed, it seems as if the national narrative around creating good jobs is disconnected from the reality of preparing people to take advantage of them.
We have seen this in our research at LISC, as we closely track the outcomes of the 40,000 people who have accessed services through our Financial Opportunity Centers (FOCs). If you aren’t familiar with LISC FOCs, they are community-based partners in 81 locations that provide a bundled set of employment services, financial counseling and other supports that help low-income people achieve a better financial outlook.
The data on this bundled approach is compelling. Our own analysis finds higher net incomes, improved credit, and more stable employment for clients who participate in the full bundle of services versus those who do not. We’ve commissioned other research, finding that people in the program were more likely than those in the mainstream workforce system to work year-round, and that especially active clients increased their earnings and were more likely to have prime credit scores. Yet more research on programs that deliver the same type of financial coaching we provide finds positive outcomes on savings and credit use.
But, there is a bit of a catch. Our clients do better, but without the technical training they need to step onto a career ladder, they hit a ceiling quickly. Many lack the basic reading and numeracy skills they need to get into training programs to begin with. And without training, they can’t obtain the skills or industry certifications they need to get a better job or connect onto a career pathway.
LISC addresses this with a new piece of the FOC model called Bridges to Career Opportunities. “Bridges” not only helps people train for and find jobs but also goes a step further, helping them build the educational foundation they need to tap those training opportunities. With it, participants have demonstrated that they are able to overcome deficits and eventually move into higher wage jobs. What’s more, our research shows that they find those jobs more quickly and then hang on to them longer than people who haven’t participated.
The range of research on this work goes well beyond LISC’s efforts. A 2010 study of low-wage Philadelphia workers, for instance found that participants who accessed job readiness and technical training earned 18 percent more over a two-year period than a control group. They gained access to higher wage jobs, were more likely to be offered jobs with benefits and held those jobs more consistently over time.
Similarly, a 2011 study of Year Up’s contextualized learning for young adults found that earnings were 30 percent greater for those who participated in education and skills building versus a control group. What’s more, there were clear indications that “soft skills,” i.e. the communications and organizational skills needed to navigate the workplace effectively, were an important contributor to success. LISC has seen that as well in our work with Bridges participants, integrating soft skills with our foundational reading and math support, and contextualized to the industry.
Now, we are in the midst of additional third-party research on LISC’s financial opportunity work. Funded by the federal Social Innovation Fund, which has supported so much progress in this area, it will include a deeper look at the Bridges program that goes beyond our early analysis.
Those results are more than a year away, but existing data makes this much clear: There is a great deal of pent up economic potential in the nation’s underdeveloped talent, and there are proven programs to help unleash into it. We need to scale them up and continue to evaluate their impact so others can replicate what works.
If you are interested in more information, check out some of the data on financial opportunity:
- Rankin, Sarah (2015). Integrated Services and Improved Financial Outcomes for Low-Income Households. (New York: Local Initiatives Support Corporation.)
- Economic Mobility Corporation (2014) Financial Opportunity Centers: Interim Findings on Program Implementation and Impacts on Credit Scores and Credit Usage. Prepared for the Local Initiatives Support Corporation and Social Innovation Fund. (New York, NY: Economic Mobility.)
- Loprest, Pamela, Gregory Acs, Caroline Ratcliffe and Katie Vinopal. 2009. ASPE Research Brief: Who Are Low-Wage Workers? Washington DC: US Department of Health and Human Services, Office of Human Services Policy, Office of the Assistant Secretary for Planning and Evaluation.
- Burnett, Kimberly, Anne St. George, Bulbul Kaul, Greg Mills (2009). Pathways to Success: An Interim Analysis of Services and Outcomes in Three Programs. Prepared for the Annie E. Casey Foundation (Cambridge, Abt Associates, June 2009)
- Corporation for Enterprise Development (2014). Financial Counseling and Access for the Financially Vulnerable: Findings from the Assessing Financial Capability Outcomes (AFCO) Adult Pilot. Prepared for the US Department of the Treasury, contract TOS-11-F-039
- NeighborWorks America (2014) Scaling Financial Coaching: Critical Lessons and Effective Practices, (Washington, DC, NeighborWorks America).
- Theodos, Brett, Margaret Simms, Mark Treskon, et al. An Evaluation of the Impacts and Implementation Approaches of Financial Coaching Programs (Washington DC, Urban Institute, October 2015)
ABOUT THE AUTHOR
Chris Walker, Director of Research & Assessment
Chris is responsible for assembling, conducting, sponsoring and disseminating research on community development’s contributions to the well-being of individuals, families and communities. He also supports the research activities of our local programs throughout the United States. Prior to joining LISC in 2005, Chris directed a community and economic development research program at the Urban Institute, where he led studies of affordable housing, community lending, arts and culture and other community development issues.