America’s Economic Recovery Depends on Job Improvements for the Underemployed
The following originally appeared on The Huffington Post.
Economic indicators continue to signal a U.S. economic recovery, with 243,000 new U.S. jobs added last month alone. The unemployment rate dropped to 8.3 percent — the lowest in three years and state unemployment claims in many states continue to decline.
This positive outlook for the U.S. economy is tempered, however, by the growing realization that the rebound in unemployment is masking a disturbing trend — the number of American workers who are underemployed. Currently, an estimated 19 percent of the U.S. workforce is made up of high-skill workers who are involuntarily working part-time or employed in low-wage jobs far below their skill level. In some states, such as California and Florida, that number is higher, with an estimated one in five workers in low-skill, low-income jobs.
A new report from the Annie E. Casey Foundation finds that 46 million Americans, many who are employed, still live at or below the poverty line. The number of children living in poverty rose 25 percent from 2000 to 2010. Three-quarters of these children had at least one parent working at a job. With an average salary of $22,000 per year or less for a family of four, they lack the means to pull themselves out of poverty.
Leanette Watkins, a single mother of three from Lynchburg, Va., illustrates the challenges working families face. Despite holding an associate’s degree in secretarial science, she was forced to take on a number of low paying jobs to make ends meet — working in a lumber yard, a candle factory and a series of temporary jobs. At each job she met with failure, not through a lack of hard work but through a series of personal crises — she lost a child in a devastating house fire, her mother passed away, and she was caring for a brother who was ill. Exacerbating all this was her lack of transportation. She owned a car but it broke down repeatedly leaving her late for work when she needed reliable employment the most. “I was in a rut that I couldn’t get out of — each time I would take steps to move forward and dig myself out of that ditch but then my car would break down. I ended up owing more money than I was taking in, and I would find myself right back in that hole again.”
While there are many programs that offer aid and assistance to the unemployed, there are fewer programs available that focus on the plight of the underemployed. For low-income working families who once made a good living, finding help is not easy and asking for help can be even harder. Many families fall victim to predatory lenders and the resulting bad credit can make it even harder to get ahead.
Yet there is help for credit-challenged, hard-working families like Leanette’s. She was introduced to Ways to Work, a national nonprofit loan program that offers access to reliable transportation, financial counseling, and other engagement services to further strengthen families. Ways to Work provides low- to moderate-income families with low-interest loans for the purchase of reliable, used vehicles, thereby helping these families retain and improve upon their current job status, repair their credit history, and become financially self-sufficient.
Through the program administered by Presbyterian Homes and Family Services in Lynchburg, Leanette was able to purchase a reliable used car that helped her manage getting to work, getting her children to daycare and school and managing the family shopping and errands. She turned a temporary job at a law firm into a permanent one, doubling her salary in a short period of time. By not spending so much money on car repairs, she was able to save and repair her credit — enough so that she could afford to put a down payment on a home. Her law firm is helping her attend college in the evening so she can earn a paralegal degree.
“Ways to Work helped me turn a job into a career,” she notes. “The car was my stepping stone to turning my life around. It’s given me the confidence and self-esteem to feel like a productive member of society again.”
Like Leanette, families across the country are finding a hand up, not a hand out, through the Ways to Work program due to its comprehensive approach. Because the program is operated locally by nonprofit multi-service member organizations of the national membership association the Alliance for Children and Families, the agencies are adept at the kind of case management and engagement required to guide and support program participants toward long-term success. The discipline of a nationally replicated program, integrated with community-based human services providers is key to the Ways to Work formula.
An independent evaluation of the Ways to Work program from 2007-2010 conducted by ICF International found that clients reported an improvement in employment circumstances, credit history, financial capability and overall quality of life.
The study found that through the tested formula of a low-interest loan from Ways to Work and engagement from an Alliance for Children and Families member agency, more than half of those in the program increased their income and 94 percent improved their employment circumstances as a result of the loan. More than one-quarter credited the program for helping them increase their educational attainment. A significant percentage (82 percent) of participants were able to move off of public welfare programs, saving the federal government $18.2 million annually in reduced public assistance and higher tax revenue. Analysts calculate the return on investment for the program at 250 percent, or $2.50 for every $1 invested.
That’s why the Walmart Foundation, Kresge Foundation, Annie E. Casey Foundation, and others have joined efforts to expand the capacity of the program to all 50 states, especially those where child poverty is greatest. Simply, this evaluation shows this program is a success. Using partnerships around the country, we must make sure it is accessible to many more motivated families. In fact, we need to significantly add to the current 32,000 families that have accessed more than $63 million in affordable loans.
The federal government is also supporting Ways to Work through the Community Development Financial Institutions Fund, a program of the U.S. Department of the Treasury and the Job Access/Reverse Commute program operated by the Federal Transit Authority.
True economic growth and recovery will ultimately depend on our nation’s ability to utilize our workforce effectively. That means giving all Americans the capability and the opportunity to work at their full potential.
Susan Dreyfus is President and CEO of the Alliance for Children and Families, and is the former Secretary for the Washington State Department of Social and Health.