CommentsLABOR MARKET - Has the labor market become increasingly stratified in recent years, so that workers without college degrees are unable to advance?
Are workers who start in positions such as retail clerk, customer service rep, or logistics/warehouse worker, increasingly locked into these entry level, lower paid positions? And if so, what, if any, policies, might increase mobility? These questions are at the top of agenda of workforce groups today.
An extensive, multi-faceted, and nonpartisan new study of worker mobility by Burning Glass Institute, issued in October, sheds light on these questions and other of how workers advance. The study, “The American Opportunity Index”, draws on the work histories of more than 3 million workers at America’s 250 largest companies, over a five year period, 2017-2021. It analyzes career histories and salaries of workers in these firms as well as job requirements in 40 million annual job postings. It draws on the Lightcast database, which includes millions of career histories from sources like LinkedIn as well as data from Glassdoor.
(A five year study by Burning Glass Institute incorporating more than 3 million worker histories shows considerable mobility of workers who start in non-professional positions such as retail clerk, logistics tech, customer service representative—far more mobility than commonly thought. And the authors set out ways companies can do more in skills and wage advancement.)
The study was led by Burning Glass Institute President Matt Sigelman, formerly the CEO of Burning Glass (now Lightcast), one of the world’s leading firms on labor market analytics. The other chief authors include Joseph Fuller, a Harvard Business School Professor who has written extensively about low wage workforces and mobility, and Gad Levanon and Nik Dawson, Chief Economist and Economist at Burning Glass Institute.
The richness of the data and the insights on mobility are not easily summarized. But three points stand out in relation to America’s workforce system and the current concerns about mobility for entry level workers:
- Most of the conventional wisdom in the workforce field today about worker mobility is wrong—there is far more advancement in entry level jobs than usually thought.
- The paths of mobility are multiple, within companies, across companies within the same sector, and among sectors.
- Companies are undertaking a number of strategies to increase mobility, for increased worker recruitment and retention.
Let’s say a word about each of these points:
Workers advancing within firms: The study’s focus is the experience of workers in entry level jobs in which thirty percent or more of workers lack a college degree. “The majority of U.S. workers don’t have four-year degrees,” the authors write, “their upward mobility hinges far more on corporate practice than on academic attainment.”
And among the 242 firms studied, there is considerable mobility already underway in these entry level jobs. At the firms ranked in the top quintile for promotions, the average entry level worker received a promotion (movement from one job category to a higher one) within two years. Even among firms ranked in the bottom quintile, an entry level workers received a promotion within three years.
The study builds on other recent research on worker mobility undertaken by these authors, including Entry-Level Work as a Stepping Stone, Not an End Point (2021) and Building From the Bottom Up (January 2022). These previous studies showed entry level workers at a wide range of firms advancing over time into jobs paying a living wage.
The first of these two studies looked at youth, 16-24, not in school, without college degrees and lacking work experience. Despite typically being written off, more than half of these youth advanced to better paying jobs over five years, such that sixty-three percent found their way to occupations paying a living wage. The second study focused on workers of all ages who were in low wage jobs (occupations with a median national wage of $39,970 or below in May 2018), and tracked 181,891 workers in these jobs between 2012-2017. Although these workers are often considered to be in “poverty trap jobs”, more than 40% of these workers advanced to living wage salaries within five years.
The publication of Barbara Ehrenreich’s best-selling Nickel and Dimed in 2001 created a narrative of workers stuck in low wage jobs, with no hope of advancing. Though the narrative was never accurate for a good percentage of low wage workers, it became a form of conventional wisdom in the workforce field and has continued to the present. This recent study, combined with the previous two, should help develop a more nuanced and accurate narrative.
The paths of mobility are multiple: The study ranks 242 of the biggest public companies on nine metrics grouped in three categories: (i) Access to entry level jobs for workers without college degrees, (ii) Pay levels, and most of all (iii) Mobility.
The Mobility category encompasses six of the nine metrics, including the number of promotions a typical worker receives over the five year period within the firm, the speed of promotions within the firm, the percentage of employees who receive a promotion after leaving the company, and the frequency with which a company fills open roles by promoting an employee from within. Companies are scored on each of the nine metrics and an overall score and ranking is developed.
Much of the initial media reporting on the Index has focused on the firms that scored highest on the overall Index scores (AT&T and American Express at the top, followed by Cisco, PG&E, and Microsoft). But the authors emphasize that opportunity and mobility have multiple dimensions, and companies that score low on some metrics, often score high on others. “One of the most surprising things we found was how widespread good practice is”, said Sigelman. “We expected to find a few companies leading the pack with everyone else lagging behind, whereas two-thirds of the companies we studied turned out to be in the top 50 on at least one of the rankings we created.”
Different companies can be equally good places to work, depending on whether the worker is interested in retention, advancement within the company or advancement within the sector or general labor market. Liberty Mutual Insurance, for example, scores in the bottom quintile of firms on the metric of frequency of promotions within, but high on their entry level workers gaining experience and advancing to better jobs at other firms. “Workers and firms will ideally find their right match. The Opportunity Index includes archetypes of opportunity creation to help articulate that more clearly. A firm that ranks at the top in career stability may be a perfect fit for one worker who is managing a busy family schedule, but not the optimal fit for another looking for rapid career growth,” notes Stuart Andreason, Managing Director of Workforce Innovation at Burning Glass.
Most companies do have active mobility efforts for entry level workers, which the authors characterize as leading to increased recruitment and retention: The authors’ main goal for the study is to recognize the mobility efforts undertaken by companies today, which they see as valuable for the companies as well as the workers.
“Firms must take an active role in identifying, retaining and nurturing talent if they are to thrive in the labor market of the future,” the authors state. “To do so they will need to abandon a short- term transactional approach to hiring in favor of a longer-term mindset that views workforce relationships as central.”
Chief among the mobility strategies the authors recommend is the establishment of clear pathways that are conveyed to workers, and that enable workers to advance. Sigelman explains, “Workers are smart. They pick up when a company is loyal to them and wants to invest in them. Level of pay may be the most important driver of worker recruitment and retention, but advancement opportunity is at or near the top.”
Sigelman continues, “A good number of companies can point to extensive in-house training operations. But these usually focus on training for specific vocational skills, such as the newest technologies, or on compliance with HR department requirements. High performing companies include these training, but also include intentional efforts to assist workers to learn new skills and guidance on how to advance.”
Of course, a lot depends on the worker themselves, and especially the willingness to commit to a company and/or industry. Sigelman adds, “Just as those companies who commit to their workforce will benefit, so too those workers who stick around, who don’t move from job to job, will have the best chance of advancing.”
As part of an effective mobility structure, Sigelman and the other authors urge companies to set metrics of access, mobility and retention. “The high performing companies establish guidelines and timetables, and make tracking these metrics an HR priority,” Sigelman explains.
Increasing mobility for entry level and low wage workers is not a new workforce or anti-poverty strategy. It has been a strategy advocated since the Manpower Development and Training Act of the 1960s and institutionalized as a part of the public workforce system since the Job Training Partnership Act of the 1980s. But workforce practitioners and agencies have found limited success in their attempts over the past four decades in implementing the strategy.
Apart from the largest employers, not enough companies have been convinced of the feasibility and financial value to them of mobility efforts for low wage workers. “The Index shows that mobility is about more than learning a set of technical skills; it is also company practice. For the workforce system to be most effective, in addition to skill building it must intentionally work with employers to build and replicate the practices that expand mobility,” Andreason adds.
The recent Burning Glass studies do not quantify financial benefits to companies of intentional worker mobility efforts (this is a possible next stage of Burning Glass research). But these studies do illustrate the range of mobility structures being undertaken and why companies have come to embrace the results. In doing so, these studies are tools for workforce practitioners in developing the next generation of strategies for worker advancement.
(Michael Bernick served as California Employment Development Department director, and today is Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and Fellow with Burning Glass Institute, and research director with the California Workforce Association. Michael's newest book is The Autism Full Employment Act (2021).)
